City Developments Ltd (CDL) Stock Analysis: 1Q25 Sales Surge, Future Outlook & Fair Value

OCBC Investment Research Private Limited

21 May 2025

City Developments Ltd (CTDM.SI): BUY Rating Maintained Amidst Encouraging 1Q25 Sales

City Developments Limited (CDL) is a leading real estate developer with core business segments in property development, hotel operations, and investment properties. The company has diversified operations in Singapore, China, Japan, UK, and US. This report provides an update on CDL’s performance, investment thesis, and valuation. [[1]]

Investment Thesis

• CDL has been proactive in reconstituting its portfolio to unlock value for shareholders.
• Recent residential project launches in Singapore have achieved decent sell-through rates.
• Uncertain global economic outlook and policy tightening measures could dampen investor sentiment.
• Investors will be closely monitoring CDL’s execution and future corporate governance practices.

1Q25 Business Update: Robust Residential Sales in Singapore

CDL’s property development segment showed strong performance in 1Q25: [[1]]

• 795 units sold with a total sales value of SGD1.9 billion.
• Year-on-year (YoY) increase of 155% in sales value (volume rose 85%).
• Successful launch of The Orie project in Toa Payoh (668 units, or 86% sold on launch weekend at SGD2,704 per square foot (psf)). [[1], [2]]

Looking ahead, CDL plans to launch its Zion Road (Parcel A) JV project in 2H25, a mixed-use integrated development with direct connectivity to Havelock MRT station. [[2]]

Overseas, CDL obtained approval for its GBP1.1 billion residential-led mixed-use scheme in Mortlake, South West London, which includes: [[2]]

• 1,068 homes
• A 1,200-pupil secondary school academy
• Retail, offices, hotel, cinema
• Nine acres of green space

Resilient Operating Metrics for Investment Properties Portfolio in Singapore

CDL’s office and retail portfolios in Singapore showed resilience: [[2]]

• High committed occupancy rates of 97.2% and 96.2% respectively, although this was a decline of 0.5 ppt and 1.8 ppt QoQ respectively.
• Positive rental reversions for all three wholly-owned office assets.
• City Square Mall recorded solid rental reversions of 15% on its renewed leases.

In overseas markets: [[2]]

• Jungceylon Shopping Center in Phuket and its UK commercial portfolio saw a sequential increase in committed occupancy.
• Challenges in China, with a subdued committed occupancy of 52.7% for CDL’s China commercial portfolio.

Hospitality operations: [[2]]

• Overall group RevPAR rose 1.2% YoY to SGD139.7.
• A 1.8% increase in average room rate was partially offset by a dip in occupancy by 0.7 ppt YoY.
• Singapore’s RevPAR fell 16.7% YoY to SGD153.7 due to a high base effect from concerts in 1Q24.

Balance Sheet: Net Gearing Ratio Increased

• Net gearing ratio (including fair value surplus on investment properties) increased 3 ppt QoQ to 72%. [[1], [2]]
• Increase partly due to the full payment for the acquisition of a 51% interest in a mixed-use development site in the Xintiandi area of Shanghai’s Huangpu District. [[2]]
• CDL has SGD3.8 billion in cash and available undrawn committed bank facilities. [[2]]
• Management focus on capital recycling activities, with potential divestments earmarked to reduce gearing, redeploy for investments, and fund dividends and share buybacks. [[2]]

Corporate Governance: Monitoring Execution and Practices

• Court proceedings related to the previous board dispute have been settled and discontinued. [[1], [2]]
• Investors will be closely monitoring CDL’s execution and future corporate governance practices. [[2]]

Fair Value Estimate

• Fair value estimate inches down from SGD6.02 to SGD6.01. [[2]]

Security Information

• Ticker: CTDM.SI [[1]]
• Market Cap (SGD b): 4.3 [[1]]
• Daily turnover (SGD m): 8.3 [[1]]
• Free Float: 47% [[1]]
• Shares Outstanding (m): 893 [[1]]
• Top Shareholder: Hong Leong Inv. Hldgs 23.8% [[1]]

Financial Summary

Key financial data for CDL: [[1]]

Key Ratios

Key financial ratios for CDL: [[1]]

ESG Updates

• CDL’s ESG rating has been consistently maintained at the highest level. [[3]]
• CDL is ahead of its peers in adopting practices to manage ESG opportunities and risks related to its diverse real estate businesses. [[3]]
• Good efforts to reduce wastage of energy and water may help capture tenants’ demand for sustainable properties. [[3]]
• CDL was the first real estate conglomerate in Southeast Asia to pledge towards net zero operational carbon by 2030. [[3]]
• Extended its pledge towards a net zero whole life carbon emissions approach, with maximum reduction of embodied carbon in new developments by 2030 and for all buildings to be net zero by 2050. [[3]]

Potential Catalysts

• Stronger-than-expected take-up rates for its residential projects. [[3]]
• Faster-than-expected increase in residential prices in Singapore. [[3]]
• Unwinding of property cooling measures. [[3]]

Investment Risks

• A slowdown in macroeconomic conditions may dampen consumer and business sentiment. [[3]]
• Weaker-than-expected margins for its residential projects. [[3]]
• Further rounds of property tightening measures implemented by the government. [[3]]

Valuation Analysis

Comparative valuation analysis: [[3]]

Company Overview (as of 31 December 2024)

City Developments Limited (CDL) is a leading global real estate operating company with a network spanning 163 locations in 29 countries and regions. Listed on the Singapore Exchange, the group is one of the largest companies by market capitalisation. Its income-stable and geographically-diverse portfolio comprises residences, offices, hotels, serviced apartments, integrated developments and shopping malls. [[5]]

• CDL has developed over 50,000 homes and owns over 23m square feet of gross floor area in residential for lease, commercial and hospitality assets globally. [[5]]
• Along with its wholly-owned hotel subsidiary, Millennium & Copthorne Hotels Limited (M&C), CDL has 155 hotels worldwide, many in key gateway cities. [[5]]

FY24 Revenue Breakdown

Revenue by segment: [[5]]

• Property Development: 28.7%
• Hotel Operations: 49.6%
• Investment Properties: 15.3%
• Others: 6.4%

FY24 Profit from Operating Activities Breakdown

Profit from operating activities by segment: [[5]]

• Property Development: 14.0%
• Hotel Operations: 40.1%
• Investment Properties: 43.9%
• Others: 2.0%

Residential Units Sold in Singapore and Cash Dividends Per Share

• Sales value (SGD’b) and number of units sold are provided. [[5]]
• Cash dividends per share are provided. [[5]]

Company Financials

Income Statement [[6]]

Profitability Ratios [[6]]

Credit Ratios [[6]]