Company Name: CITY DEVELOPMENTS LIMITED
| Research House: CIMB | Price Call: HOLD | Target Price: 11.19 |
City Developments' (C09.SG) 1Q13 results were weak amid a "collapse" in the hotel segment profit before interest and taxes, CIMB says. "It remains to be seen if it recovers in subsequent quarters," it says.
At the Millennium & Copthorne (MLC.LN) level, "a combination of factors including the ongoing refurbishments which resulted in the temporary closure of rooms, regional geopolitical tensions in Korea as well as harsh weather conditions in Europe and the US dented occupancy," it says.
While in Singapore, lower corporate travel, rising room supply and a foreign-labor-quota cut pressured costs and occupancy for CDL-HT (J85.SG), it says. It notes 1Q13 core earnings were 15% of its full-year forecast and 13% of consensus; CIMB cuts FY13-15 core EPS estimates by 3%-12% on lower hotel earnings, cutting its target to $11.19 from $11.25.
It notes CityDev is working down Singapore residential-property inventory, but while favourable mass-market project takeup is expected, margins and pricing may not excite and most unsold inventory is in the subdued high-end segment. While CityDev plans to enter London property development, details remain sketchy and it likely won't excite the market until tangible results are produced, it says.
It keeps a Neutral call. The stock is down 0.8% at $11.51.
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