CGS International Securities
August 13, 2025
City Developments: Capital Recycling, Earnings Surge, and ESG Leadership Set Stage for Robust Growth
Executive Summary: Focused Capital Recycling Powers City Developments in 2025
City Developments Limited (CIT SP) delivered a robust performance in 1H25, marked by strategic asset divestments, resilient residential sales, and continued leadership in ESG. The report, released by CGS International Securities on August 13, 2025, provides a comprehensive view into the group’s financials, operational highlights, and sector positioning—offering valuable insights for investors and market watchers.
1H25 Financial Highlights: Revenue Growth, Forex Impact, and Exceptional Gains
- 1H25 EPS: 9.7 Singapore cents, reaching 37.9% of FY25 forecast.
- Revenue: S\$1.69 billion, up 8% year-on-year, driven by UK and China property sales.
- Profit Before Tax (PBT): Fell 10% YoY to S\$139.9 million, mainly due to S\$63.1 million net forex losses from a weaker USD.
- PATMI: Rose 3.9% YoY, supported by a lower effective tax rate resulting from prior-year overprovisions.
- PATMI Ex-Forex Impact: Sharp increase of 323% YoY to S\$154.3 million.
- Net Debt/Equity: At 0.7x as of end-1H25.
- Special Interim Dividend: Proposed at 3 Singapore cents per share.
Strategic Asset Divestments and Capital Deployment
- Divestments Year-To-Date: S\$1.5 billion locked in, including the sale of South Beach’s hotel, retail, and office components (50.1% stake).
- South Beach Transaction: Expected S\$465 million divestment gain in 2H25.
- US Asset Sales: Millenium Hotel St Louis sold (July 2025); Comfort Inn Near Vail Beaver Creek sale contracted.
- Balance Sheet Impact: Divestments aimed at reducing gearing and redeploying capital into higher-yielding opportunities.
Residential Development: Strong Sales and Future Launch Pipeline
- 1H25 Residential Sales: 903 units sold in Singapore, valued at S\$2.2 billion.
- Key Project Contributions: Completion of Copen Grand EC (Apr 2025), CanningHill Piers, The Orie, The Myst, Norwood Grand, Union Square Residences.
- Launch Pipeline: 2,260 units, including the upcoming 706-unit Zyon Grand (4Q25) and 570-unit Lakeside Drive development (3Q26).
Singapore office and retail portfolio occupancy remained high at 97%, while UK and Japan living sectors achieved 80–95% take-up.
Hospitality Segment: Cost Pressures and Strategic Mitigation
- 1H25 Hotel Revenue: Down 1.5% YoY, despite a 0.5% increase in portfolio RevPAR.
- PBT: S\$84 million loss, affected by US\$ depreciation, financing costs, and inflation.
- Singapore/London RevPAR: Declined by 13.6% and 2% YoY, respectively.
- Cost Management: Supplier diversification, variable cost controls, and deferred non-essential capex in effect.
Upward Earnings Revisions and Valuation Metrics
- FY25–27F EPS Upgrades: Raised by 4–233%, reflecting divestment gains and faster sales at The Orie.
- Target Price: Maintained at S\$8.97, representing a 45% discount to RNAV.
- Stock Valuation: Trading at 0.62x FY25 P/BV—viewed as inexpensive.
- Re-rating Catalysts: Potential for lower interest rates and accelerated asset recycling.
- Downside Risks: Slow macroeconomic outlook and property cooling measures could impact demand for commercial and residential assets.
| Financial Summary |
Dec-23A |
Dec-24A |
Dec-25F |
Dec-26F |
Dec-27F |
| Total Net Revenues (S\$m) |
4,941 |
3,271 |
3,715 |
3,891 |
4,042 |
| Operating EBITDA (S\$m) |
927 |
733 |
991 |
1,013 |
1,054 |
| Net Profit (S\$m) |
317.3 |
201.3 |
770.7 |
276.3 |
313.4 |
| Core EPS (S\$) |
0.35 |
0.22 |
0.86 |
0.31 |
0.35 |
| Core EPS Growth |
1210% |
(36%) |
286% |
(64%) |
13% |
| FD Core P/E (x) |
18.15 |
28.45 |
7.38 |
20.53 |
18.10 |
| DPS (S\$) |
0.12 |
0.10 |
0.12 |
0.12 |
0.12 |
| Dividend Yield |
1.89% |
1.57% |
1.89% |
1.89% |
1.89% |
| EV/EBITDA (x) |
15.10 |
20.41 |
14.21 |
13.58 |
12.75 |
| Net Gearing |
97% |
111% |
100% |
94% |
87% |
| P/BV (x) |
0.63 |
0.63 |
0.62 |
0.60 |
0.58 |
| ROE |
3.45% |
2.20% |
8.44% |
2.97% |
3.27% |
Peer Comparison: Singapore Developers Sector Snapshot
| Company |
Ticker |
Rec. |
Price (S\$) |
Target Price (S\$) |
Mkt Cap (US\$m) |
Core P/E FY25F |
P/BV FY25F |
Div. Yield FY25F |
RNAV Prem/(Disc.) |
| APAC Realty Ltd |
APAC SP |
Add |
0.71 |
0.81 |
195 |
13.3 |
1.47 |
5.3% |
n.a. |
| Capitaland Investment |
CLI SP |
Add |
2.75 |
4.30 |
10,675 |
16.8 |
0.96 |
4.4% |
-42% |
| City Developments |
CIT SP |
Add |
6.35 |
8.97 |
4,415 |
7.4 |
0.62 |
1.9% |
-61% |
| Frasers Property Limited |
FPL SP |
Add |
0.95 |
1.41 |
2,887 |
18.8 |
0.36 |
4.8% |
-63% |
| Hongkong Land Holdings Ltd |
HKL SP |
Hold |
6.18 |
4.91 |
13,471 |
20.2 |
0.44 |
3.9% |
n.a. |
| Propnex Ltd |
PROP SP |
Add |
1.64 |
1.77 |
945 |
15.4 |
8.36 |
6.2% |
n.a. |
| UOL Group |
UOL SP |
Add |
7.05 |
8.20 |
4,635 |
17.7 |
0.51 |
2.6% |
-48% |
Singapore sector averages: Core P/E FY25F 15.6x, P/BV FY25F 0.56x, Dividend Yield FY25F 3.7%, RNAV Discount -33%.
ESG Leadership: City Developments Sets the Benchmark
- LSEG ESG Score: A- overall (Environmental: A, Social: A-, Governance: A-), with ESG Controversies rated A+.
- Key Achievements FY24:
- 25% reduction in Scopes 1 & 2 operational carbon emissions (vs. 2016 baseline).
- 38% reduction in Scope 3 embodied carbon in new developments.
- 52.1% reduction in Scope 3 investment intensity.
- Energy use intensity fell 24.2% (office/industrial) and 18.4% (retail) vs. 2016 levels.
- Water use intensity declined 23.5% (office/industrial) and 36.9% (retail) vs. 2016 levels.
- Energy savings of S\$44 million from retrofitting and initiatives (2012–24).
- Over S\$9 billion in sustainable financing since 2017.
- Global Recognition: Included in 14 leading sustainability indices; AAA MSCI ESG rating since 2010.
- ESG Reporting: First in Southeast Asia to harmonise key ESG standards and UN SDGs.
- Fatality incident in FY24 noted, against a zero fatality target.
- No premium/discount applied for ESG in current valuations, but future improvements may enhance operational and financial performance.
Detailed Financials: Profitability, Cash Flow, and Balance Sheet Analysis
| Profit & Loss (S\$m) |
Dec-23A |
Dec-24A |
Dec-25F |
Dec-26F |
Dec-27F |
| Total Net Revenues |
4,941 |
3,271 |
3,715 |
3,891 |
4,042 |
| Gross Profit |
1,649 |
1,462 |
1,700 |
1,756 |
1,826 |
| EBITDA |
927 |
733 |
991 |
1,013 |
1,054 |
| Depreciation and Amortisation |
(254) |
(277) |
(271) |
(268) |
(265) |
| Operating EBIT |
673 |
455 |
720 |
745 |
789 |
| Financial Income/(Expense) |
(396) |
(372) |
(492) |
(477) |
(470) |
| Profit Before Tax (pre-EI) |
324 |
144 |
320 |
360 |
412 |
| Exceptional Items |
149 |
230 |
553 |
0 |
0 |
| Pre-tax Profit |
473 |
374 |
873 |
360 |
412 |
| Taxation |
(124) |
(162) |
(62) |
(69) |
(82) |
| Profit After Tax |
349 |
212 |
811 |
291 |
330 |
| Minority Interests |
(31) |
(11) |
(41) |
(15) |
(17) |
| Net Profit |
317 |
201 |
771 |
276 |
313 |
Key Ratios and Drivers
- Revenue Growth: 13.6% (2025F), 4.7% (2026F), 3.9% (2027F).
- Operating EBITDA Margin: 26.7% (2025F), 26.0% (2026F), 26.1% (2027F).
- Net Cash Per Share: (S\$10.57) in 2025F, improving to (S\$9.83) in 2027F.
- BVPS: S\$10.27 (2025F), S\$10.91 (2027F).
- ROE: 8.44% (2025F), 3.27% (2027F).
- Gross Interest Cover: 1.21x (2025F), 1.30x (2027F).
- Property Development Revenue: S\$1,855.5 million (2025F), S\$2,027.3 million (2027F).
- Hotel Operations Revenue: S\$1,289.6 million (2025F), S\$1,436.8 million (2027F).
- Rental Income: S\$441.9 million (2025F), S\$449.8 million (2027F).
Shareholder Structure and Analyst Insights
- Hong Leong: 35.3% stake
- Standard Life Aberdeen: 5.0% stake
- Free Float: 59.7%
- Consensus Ratings: 7 Buy, 4 Hold, 3 Sell
- Current Price: S\$6.35; Target Price: S\$8.97; Upside: 41.3%
- Coverage Analyst: LOCK Mun Yee
Conclusion: City Developments Positioned for Upside Amid Capital Recycling and ESG Momentum
City Developments stands out in 2025 for its proactive capital recycling, strong residential sales, and unwavering ESG commitment. With enhanced earnings forecasts, an attractive valuation, and a robust pipeline of launches and divestments, CIT offers compelling upside for investors. Sector peers remain competitive, but CIT’s balance sheet discipline and sustainability leadership reinforce its position as a top pick in Singapore’s property sector. Investors should monitor interest rate trends, asset recycling pace, and macroeconomic developments for further upside potential.
