RHB upgrades City Developments to Buy, hikes its target price

Singapore five-dollar note Photo by Leslie Shaffer

RHB upgraded City Developments to Buy from Take Profit and hiked its target price to S$15.00 from S$11.30.

“As one of the largest residential landbank owners in Singapore, it remains the best proxy for investors looking to tap into the residential segment’s recovery,” RHB said in a note dated Monday.

The brokerage noted that CityDev has a current unsold inventory of around 3,859 units, among the highest for Singapore developers.

“While it has been fairly aggressive in recent land bids, we believe its strong brand positioning and established track record should aid in its projects commanding premium prices,” RHB said, adding its “channel checks” suggested the preview of The Tapestry project drew a strong response of more than 5,000 people visiting the show units at the March 10 launch.

‘Healthy margins’

RHB estimated launch prices at around S$1,300 per square foot, suggesting a “healthy” margin of more than 20 percent.

Additionally, “its listed subsidiary M&C’s hotel operations are also poised to benefit from strong global economic growth aiding the hospitality sector. The renewed focus on its fund management platform would help boost recurring income and ROEs,” RHB said.

RHB also noted that CityDev’s net gearing is at a historical low, and it has a “strong war chest” of more than S$5 billion to pursue any  acquisition opportunities.

 

RHB raised its RNAV, or revalued net asset value, for CityDev to S$16.69 from S$14.12 after marking the M&C portfolio to market and including recently acquired assets.

The stock was up 0.83 percent at S$13.36 at 12:26 P.M. SGT.

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