Broker: CGS International Securities
Date of Report: August 13, 2025
City Developments Leads Singapore Property Sector with Aggressive Capital Recycling and Strong ESG Focus
Overview: City Developments (CIT) Delivers Mixed 1H25 Results, Accelerates Capital Recycling Strategy
City Developments (CIT), a leading name in Singapore’s property development and investment landscape, reported an 8% year-on-year increase in 1H25 revenue to S\$1.69 billion. This growth was primarily driven by key divestments, including the Ransome’s Wharf site in the UK and the Suzhou Hong Leong City Center office component. Despite the revenue uptick, profit before tax (PBT) fell 10% to S\$139.9 million, impacted by net foreign exchange losses of S\$63.1 million due to a weaker US dollar. On a brighter note, profit attributable to shareholders (PATMI) rose 3.9% year-on-year, boosted by a lower effective tax rate resulting from overprovisions in prior years. Excluding forex impact, PATMI would have soared 323% to S\$154.3 million, reflecting robust residential segment performance.
Capital Recycling: S\$1.5 Billion Divestments and Balance Sheet Strengthening
- CIT has locked in over S\$1.5 billion of contracted divestments year-to-date, including its 50.1% stake in the hotel, retail, and office components of South Beach.
- The group is focused on using divestment proceeds to reduce net gearing and redeploy capital into higher-yielding opportunities.
- A special interim dividend per share (DPS) of 3 Singapore cents was proposed, signaling confidence in its capital management.
- Net debt to equity ratio stood at 0.7x at end-1H25.
Residential Segment: Strong Sales and Robust Launch Pipeline
- Residential development revenue and PBT increased year-on-year, supported by the completion of Copen Grand executive condominium (Apr 2025), CanningHill Piers, The Orie, The Myst, Norwood Grand, and Union Square Residences.
- 903 units were sold in Singapore during 1H25, valued at S\$2.2 billion.
- Launch pipeline includes 2,260 units, with the 706-unit Zyon Grand scheduled for 4Q25 and a 570-unit project at Lakeside Drive in 3Q26.
- Singapore office and retail portfolio occupancy remained resilient at 97%.
- UK and Japan living sectors posted strong take-up rates of 80-95%.
Hospitality Segment Faces Headwinds
- Hotel operations revenue slipped 1.5% year-on-year, despite a marginal 0.5% increase in portfolio RevPAR.
- PBT for the segment showed a loss of S\$84 million, pressured by depreciation of the US dollar, higher financing costs, and inflation.
- Singapore and London RevPAR declined by 13.6% and 2% year-on-year, respectively.
- Cost pressures are being managed by supplier diversification, controlling variable costs, and deferring non-essential capex.
Major Divestments: South Beach Transaction and US Hotel Sales
- CIT will recognize a S\$465 million gain upon completion of the South Beach transaction in 2H25.
- Millenium Hotel St Louis was sold in July 2025, with another US hotel, Comfort Inn Near Vail Beaver Creek, already contracted for sale.
- These moves are expected to strengthen CIT’s balance sheet and provide dry powder for future investments.
Financial Performance and Outlook
| Financials (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 |
| Operating EBITDA |
927 |
733 |
991 |
1,013 |
1,054 |
| Net Profit |
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 |
| P/BV (x) |
0.63 |
0.63 |
0.62 |
0.60 |
0.58 |
| ROE (%) |
3.45% |
2.20% |
8.44% |
2.97% |
3.27% |
Earnings per share (EPS) forecasts have been raised sharply for FY25 (+223%), FY26 (+5%), and FY27 (+4%), reflecting divestment gains and rapid sales pace at The Orie. The current price stands at S\$6.35, with a target price of S\$8.97, representing a 41.3% upside. The valuation is attractive at 0.62x FY25 P/BV.
ESG Leadership and Sustainability Initiatives
- CIT achieved an overall ESG rating of A-, with top marks in Environmental (A), Social (A-), and Governance (A-).
- Rated AAA by MSCI ESG since 2010 and included in the 2024 Global 100 Most Sustainable Corporations.
- First in Southeast Asia to harmonize nine major ESG reporting standards and 14 UN SDGs in its disclosures.
- On track for a Science-Based Targets initiative (SBTi) validated goal of 63% reduction in carbon emissions intensity by 2030.
- Operational carbon emissions (Scopes 1 & 2) reduced by 25% from 2016 baseline; Scope 3 embodied carbon in new developments down 38%; Scope 3 investment intensity cut by 52.1%.
- Energy use intensity lowered by 24.2% in office/industrial and 18.4% in retail portfolios; water use intensity down by 23.5% and 36.9% respectively.
- Reported energy savings of over S\$44 million from energy retrofitting.
- Secured more than S\$9 billion in sustainable financing since 2017.
Despite these achievements, no premium or discount was applied in the fundamental valuation for ESG; however, ongoing efforts are expected to drive operational and financial efficiencies.
Peer Comparison: Singapore Property Developers
| Company |
Price (S\$) |
Target Price (S\$) |
Market Cap (US\$ m) |
FY24A P/E (x) |
FY25F P/E (x) |
FY26F P/E (x) |
RNAV (S\$) |
Prem./Disc. to RNAV (%) |
P/BV (x) |
Div. Yield FY25F (%) |
| APAC Realty Ltd |
0.71 |
0.81 |
195 |
26.3 |
13.3 |
11.2 |
n.a. |
n.a. |
1.59 |
5.3 |
| Capitaland Investment |
2.75 |
4.30 |
10,675 |
28.9 |
16.8 |
15.6 |
4.78 |
-42% |
1.01 |
4.4 |
| City Developments |
6.35 |
8.97 |
4,415 |
28.4 |
7.4 |
20.5 |
16.32 |
-61% |
0.63 |
1.9 |
| Frasers Property Limited |
0.95 |
1.41 |
2,887 |
10.7 |
18.8 |
18.7 |
2.57 |
-63% |
0.37 |
4.8 |
| Hongkong Land Holdings |
6.18 |
4.91 |
13,471 |
33.3 |
20.2 |
19.6 |
na |
na |
0.46 |
3.9 |
| Propnex Ltd |
1.64 |
1.77 |
945 |
29.7 |
15.4 |
14.3 |
n.a. |
n.a. |
9.83 |
6.2 |
| UOL Group |
7.05 |
8.20 |
4,635 |
20.8 |
17.7 |
15.9 |
13.66 |
-48% |
0.52 |
2.6 |
| Singapore Average |
|
|
25.6 |
15.6 |
17.6 |
|
-33% |
0.58 |
3.7 |
City Developments stands out with a significant -61% discount to RNAV, underscoring its valuation appeal among peers. Its P/BV of 0.62x and dividend yield of 1.9% further solidify its position as a value play in the sector.
Balance Sheet and Cash Flow Highlights
- Total cash and equivalents projected to rise from S\$2.4 billion (2023) to S\$4.9 billion by 2027.
- Properties under development stable at S\$4.85 billion.
- Total debt expected to increase from S\$11.6 billion (2023) to S\$13.7 billion (2027), with net gearing improving from 111% (2024) to 87% (2027).
- Shareholders’ equity forecasted to rise from S\$9.1 billion (2024) to S\$9.75 billion (2027).
- Free cash flow to equity returns positive from 2024 onwards, reaching S\$235 million in 2027.
Key Ratios and Drivers
- Revenue growth rebound expected: +13.6% in 2025, +4.7% in 2026, +3.9% in 2027.
- Operating EBITDA margin set to improve from 22.4% (2024) to 26.1% (2027).
- Gross interest cover to improve to 1.30x by 2027.
- ROIC and ROCE projected to reach 5.38% and 3.94% respectively in 2027.
- Effective tax rate drops to 7.1% in 2025 before normalizing to around 19% thereafter.
| Key Segment Revenues (S\$m) |
Dec-23A |
Dec-24A |
Dec-25F |
Dec-26F |
Dec-27F |
| Property Development |
2,012.3 |
2,470.5 |
1,855.5 |
1,956.1 |
2,027.3 |
| Hotel Operations |
1,102.6 |
1,222.1 |
1,289.6 |
1,361.0 |
1,436.8 |
| Rental Income |
357.3 |
439.5 |
441.9 |
445.5 |
449.8 |
| Others |
128.0 |
128.3 |
128.3 |
128.3 |
128.4 |
Stock Ratings and Investment Outlook
- CIT receives an “Add” rating, with a total return expectation exceeding 10% over the next 12 months.
- Key catalysts for re-rating include a faster-than-expected drop in interest rates and accelerated asset recycling.
- Potential downside risks: macroeconomic slowdown impacting commercial demand and property cooling measures affecting residential sales.
- Consensus ratings: 7 Buy, 4 Hold, 3 Sell.
- Major shareholders: Hong Leong (35.3%), Standard Life Aberdeen (5.0%).
The current market capitalization stands at S\$5.67 billion (US\$4.42 billion), with 893.4 million shares outstanding and a free float of 59.7%.
City Developments: A Sector Leader with Sustainability and Value Upside
City Developments continues to demonstrate its leadership in Singapore’s property and investment sector, leveraging robust capital recycling, an expansive residential pipeline, and industry-leading ESG practices. With attractive valuations, strong balance sheet management, and a clear strategy for sustainable growth, CIT remains a compelling pick for investors seeking both value and sustainability in the property sector.
