Buy City Developments (SGX: C09): Capital Recycling + Residential Momentum = Re-Rating Upside
City Developments (“Citydev”) is at a turning point in 2025—unlocking shareholder value through disciplined
capital recycling, robust residential performance, and an attractive valuation. With recent divestments, a strong
launch pipeline, and upgraded earnings forecasts, we see compelling upside potential.
Strategic Asset Divestments: Unlocking Capital for Growth
- S$1.5b divestments YTD, underscoring proactive capital recycling.
- South Beach: 50.1% stake sale; expected S$465m divestment gain in 2H25.
- US asset rationalisation: Millenium Hotel St Louis sold (Jul 2025); Comfort Inn Near Vail Beaver Creek contracted for sale.
Proceeds are being redeployed to reduce gearing and pursue higher-yielding opportunities—strengthening the balance sheet and positioning the group for sustainable growth.
Residential Sales: Robust Momentum & Pipeline
- 1H25 sales: 903 units in Singapore worth S$2.2b.
- Key completions: Copen Grand EC (Apr 2025), CanningHill Piers, The Orie, The Myst, Norwood Grand, Union Square Residences.
- Launch pipeline: 2,260 units—Zyon Grand (706 units, 4Q25) and Lakeside Drive (570 units, 3Q26).
- Stabilised portfolio: Singapore office & retail occupancy ~97%; UK/Japan living sectors 80–95% take-up.
Hospitality: Near-Term Pressures, Long-Term Discipline
- 1H25 hotel revenue down 1.5% YoY despite a 0.5% RevPAR rise.
- PBT: S$84m loss on USD depreciation, financing costs, and inflation.
- Mitigation: supplier diversification, variable cost controls, and deferred non-essential capex.
Valuation: Discount to RNAV with Re-Rating Potential
- FY25–27F EPS upgrades: +4% to +233% (divestment gains, faster sales at The Orie).
- Target price: S$8.97 (~45% discount to RNAV).
- Current valuation: ~0.62x FY25 P/BV—inexpensive vs. peers.
- Technical momentum: Sideways near S$6.93, break above S$6.85 resistance; near-term targets S$7.15 and S$7.50 (~8% upside).
Why Citydev Stands Out
- Proactive capital recycling strengthens financial flexibility.
- Strong residential engine underpins earnings visibility.
- ESG commitment supports long-term resilience.
- Attractive valuation plus earnings upgrades set up a re-rating story.
Key Catalysts
- Potential interest rate cuts
- Accelerated asset recycling
- Stronger-than-expected sales momentum
Risks
- Sluggish macroeconomic growth
- Property cooling measures dampening demand
Conclusion: A Conviction Buy
Citydev is executing on divestments, residential momentum, and disciplined capital management.
With a solid launch pipeline, upgraded earnings outlook, and supportive technicals, we reiterate:
Buy Citydev.
Price Targets: Near-term S$7.15–S$7.50; long-term re-rating potential toward S$8.97.
