City Dev

City Dev: 3Q12 results below, on timing of devt profits. Net profit at $135m. Excluding divestment gains of $42m from the sale of industrial strata units, 3Q12 core earnings were down ~15% yoy. For 9M12, sales booked was higher than expectations, but project margins appear to be lower than expectations. For the quarter, City dev booked $76m (-25% yoy ex divestment gains) in profits from Buckley Classique, 368 Thomson, Cube 8, Volari, Hundred Trees, H20 Residence, The Glyndebourne NV Residences, Tree House, The Gale and Hedges Park. However, no profit was booked from The Rainforest and Blossom EC projects ( both 100% sold) nor from Bartley Residences (92% sold), Palette (94% sold), UP@Robertson Quay (68% sold) or HAUS@Serangoon Garden (89% sold), which should underpin earnings visibility. The co plans to launch its Echelon project at Alexandra Road in 4Q (~508 units) and its Pasir Ris site in 1Q13 (~912 units). Meanwhile South Beach will be launched at “the appropriate time”. On the hotels segment, despite a strong 3Q for London hotels (REVPAR +20%), Asia REVPARs fell 0.2% impacted by Taipei renovations and cautious corporate spending in Singapore. Pretax profit from hotel operations declined 20% to $56m on account of opening expenses for the W Singapore Sentosa Cove and the absence of divestment gains from its Studio M hotel. Credit Suisse notes near term primary sales should be hit after 6 Oct measures, and City Devt may be impacted. Keeps at Overweight, but lowers TP to $13.30 from $13.39, says pullbacks offer good entry opportunity. Deutsche keeps at Hold with TP $11.05. Nomura maintains at Neutral, but raises TP slightly to $11.46 from $11.42, to reflect the latest land acquisitions at Tai Thong Crescent and Sengkang West Way. Expects the range bound performance ($10-12 range in 2012) to continue into 2013. Maybank KE maintains Sell on headwinds faced by M&C and possibly its mass mkt launches in FY13; cuts TP to $9.70 from $10.30.