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City Development Limited’s Latest Earnings: Profits Skyrocket

City Developments Limited (SGX: C09) is one of the three property developers in the Straits Times Index (SGX: ^STI). CDL is a leading real estate company with a presence in 29 countries and regions. Its property portfolio consists of residences, offices, hotels, serviced apartments, integrated developments, and shopping malls.

Here are the important points to take note of from CDL’s latest earnings report.

The key numbers

  1. Revenue for the quarter was down 29.5% to S$746.2 million while gross profit decreased 4.9% to S$352.1 million.
  2. CDL’s profit, on the other hand, increased by 51.9% to S$211.5 million. Similarly, profit attributable to equity holders skyrocketed 133.8% year-on-year to S$199.6 million.
  3. CDL’s earnings per share (EPS), followed suit rising by 134% to 22 cents year-on-year.
  4. Moving on, the property conglomerate saw its net asset value (NAV) per share increasing by 2% sequentially to S$11.32.
  5. Lastly, CDL saw its financial position weakening with net debt decreasing from S$3.83 billion to S$4.54 billion and its net gearing ratio rising from 31% to 36% sequentially.

Operational Highlights

Revenue decreased for the quarter due to lower revenue year-on-year given the recognition of the completion of an EC development in the previous year. On a more positive note, higher rental income helped to bolster revenue, with this coming from recently-acquired properties including Aldgate House and 125 Old Broad Street in the UK, Central Mall and Le Grove Serviced Residences which re-opened in July 2018 in Singapore.

Net attributable profit increased boosted by strong profit margins for development projects recognised this quarter and the realisation of a $144.3 million pre-tax gain from the divestment of Manulife Centre.

Apart from that, CDL announced healthy residential sales in Singapore and China with a total sales value of S$588.3 million. It also mentioned that it has launched one project (Amber Park) which saw healthy uptake on its launch weekend and has plans to launch another three projects in 2019.

Looking ahead

Mr. Sherman Kwek, CDL’s Group Chief Executive Officer commented:

“We have continued to accelerate our GET strategy of Growth, Enhancement, and Transformation through multiple initiatives. With our recent spate of residential launches in Singapore, we have shown our ability to acquire good sites at the right prices and demonstrated that we have the required operational and sales expertise to ensure strong execution. Our diversification strategy is on track and we continue to broaden our presence in our key overseas target markets.

We also kickstarted our fund management business through our investment in IREIT Global’s fund manager and REIT as well as acquired two prime offices in the UK that could potentially seed a future fund. Most significant of all is our game-changing investment into Sincere Property Group, a transformational partnership that will fast track CDL’s growth in China with an enlarged portfolio and a substantial pipeline of development and recurring income properties. Looking ahead, we will remain strategic and disciplined in our acquisitions and continue to enhance our operational efficiency and execution.”

The Foolish conclusion

At the end of trading on Friday, CDL’s shares closed at S$8.61 apiece, translating to a price-to-book ratio of 0.75 while the property group’s dividend yield stands at 1.6%.

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Motley Fool Singapore writer Esjay contributed to this article. Esjay does not own shares in any of the above-mentioned companies.

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