City Developments Limited (SGX: C09), or CDL, is a real estate company listed on the Singapore market with a presence in 28 countries and regions. Its business segments within the real estate segment include property development, hotel operations, rental properties, and others.
CDL has a diversified real estate portfolio which includes development of residential and commercial properties and owning and managing shopping malls, offices and serviced apartments.
Here are two metrics to assess how the real estate conglomerate has performed over the past five years.
CDL’s net asset value (NAV) has been steadily increasing over the past five years moving from S$9.25 in 2014 to S$11.07 in 2018. This shows that CDL is consistently increasing value for its shareholders at a compounded annual rate of 4.59%.
At the current share price of S$9.84 (as of the time of writing), this results in a price-to-book (PB) ratio of 0.88. What this means is that investors are getting the assets held by the company for a discount, and this could be a margin of safety for investors.
Investors should also note that CDL has not included fair value gains on its investment properties at the above-mentioned NAV. This is because according to the group’s policy, it states its investment properties at cost, less accumulated depreciation and impairment losses.
This means that its NAV should be higher if the investment properties are valued at current market rates. This will bring the PB ratio down further, making it even more attractive to own City Developments shares.
Meanwhile, CDL’s dividend per share has increased at a compounded annual rate of 5.74% over the last four years from S$0.16 in 2014 to S$0.20 in 2018. Investors should note that the dividends include a special dividend which was consistent from 2014 to 2016, while this increased slightly in 2017 and increased again in 2018.
Assuming CDL pays out a dividend at the same rate as 2018 this would lead to a yield of 2.0% at its current price.
To sum up, City Developments has successfully grown its NAV and raised its dividends over the past five years. At its current price, CDL looks like a bargain due to its low PB ratio.
This provides investors with some margin of safety and the dividend yield provides some income while waiting for the prices to revert to its fair value.
Motley Fool Singapore writer Esjay contributed to this article. Esjay doesn't own shares in any companies mentioned.
The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. The Motley Fool has recommended shares of City Developments Limited. Motley Fool Singapore contributor Tim Phillips does not own shares in any companies mentioned.