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What Investors Need To Know About City Developments’ Latest First Quarter Earnings

City Developments (SGX: C09) is the second largest listed property developer in Singapore with real estate interests around the globe, though its primary focus is on Singapore, the United States, and the United Kingdom.

With its announcement of its first quarter results just yesterday, let’s see how it fared.

Operating results for the quarter

Revenue for the first quarter was down 5.4% year-on-year to S$734.2 million. With a relatively similar level of expenses compared to a year ago, the company recorded an operating profit of S$158.8 million, a decline of some 22%. One of the main reasons for the big fall in operating profit was the absence of a huge “Other income” that appeared in the corresponding quarter a year ago.

All told, City Developments ended the quarter with a 13.1% year-on-year decline to S$119.7 million in profits attributable to shareholders. Correspondingly, the real estate company’s earnings per share had decreased by 12.6% to 13.2 Singapore cents.

City Developments continues to make most of its profits from its property development segment, which contributed about 60% of the company’s total pre-tax profits. The net gearing ratio for the company remains low at only 27%. This is a real advantage for City Developments as it prepares itself for a potential slowdown in Singapore’s property market; according to the Urban Redevelopment Authority (URA), the volume of private residential units sold had dropped significantly since the last quarter.

In such an instance, having a strong balance sheet is extremely important in the company’s ability to weather a storm. Having a solid financial footing is not City Developments’ only strategy in coping with a lacklusture property market in Singapore however –  the company has been focusing on international real estate markets in a bid to diversify away from Singapore.

Foolish Summary

During the quarter, City Developments had declared a 1.93 cents dividend for each preference share. However, investors in the company’s ordinary shares need to know that the preferred dividends would not accrue to them. Based on City Developments’ closing price of S$10.80 yesterday, the company is selling for 15 times trailing earnings and carries a yield of just 0.74%.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Stanley Lim doesn’t own shares in any companies mentioned.