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DBS: City Developments – Buy Target price $10.50

Posted on August 15, 2022August 15, 2022 By alanyeo No Comments on DBS: City Developments – Buy Target price $10.50
Turning into a record year

Stellar 1H22 results led by gains from divestment and distribution in specie of CDLHT shares, and a strong turnaround in hospitality segment; interim dividend quadrupled y-o-y to 12 Scts.

  • City Developments (City Dev) delivered stellar 1H22 results, recording a PATMI of S$1.1b, reversing from a net loss of S$0.03b in 1H21. The strong results were mainly due to gains recognized from the i) divestment of Millennium Hilton Seoul and its adjoining land site which was completed in Feb22 for gains of KRW1.1t (S$1.25b), and ii) total gains of S$492.4m (including negative goodwill) on the deconsolidation of CDL Hospitality Trust (CDLHT) from the Group following the distribution in specie of CDLHT in May22. 
  • Excluding the divestment gains, 1H22 PATMI was S$110m in the black vs net loss of S$32m in 1H21. 1H22 EBITDA grew 19% y-o-y to S$323m
  • The strong rebound was led by a strong turnaround in hospitality segment, reversing a net loss of S$143m in 1H21 to PBT of S$15m in 1H22. 
  • PBT from property development fell 12% y-o-y to S$104m due to the absence of negative goodwill recognized in 1H21. Excluding the negative goodwill, 1H22 PBT would have recorded a growth of S$21m.
  • Net gearing improved 16 ppts to 83% vs 99% in FY21 (on fair value, gearing improved to 52% from 61% in FY21), while average cost of debt increased 0.2ppts to 1.9% vs 1.7% in FY21.
  • Declared a surprise 12 Scts interim dividend vs 3 Scts in 1H21 and 6 Scts typically pre-COVID. 
City-Dev-2Q2022_12aug2022Click here to Download Full Report in PDF

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Research - Equities Tags:City Developments

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