City Dev

City Dev: Barclays reiterated U/W with TP lowered 0.99% to $8.99, citing (i) diversification (into China, UK, Japan and potentially Australia) in progress, insufficient to plug Singapore's slow down (ii) lower Singapore home sales coupled with skinny launch pipeline in next 12 months, and meanwhile (iii) headwinds in CDL's core markets, with 69% of its Singapore landbank exposed to the high-end market, which remain negative In a bid to diversify out of Singapore market, CDL has three acquisition projects in pipeline for CHINA, six freehold properties in Greater LONDON area, a JV to acquire prime freehold land in TOKYO for development into high-end condominiums, and is reportedly considering bidding for Leighton Holding's US$7b residential and commercial property portfolio in AUSTRALIA along with Stockland Group. However, these diversification efforts are likely to benefit growth in the medium term, and are unlikely to plug the decline in its core Singapore market in the near term. In Singapore, CDL has lowered prices for its Coco Palms development, take-up rate at Commonwealth Towers (launched May 2014) is only 39% and at mixed development The Venue Residences and Shoppes (launched Oct 2013) is only 27% sold. Among higher-end projects, none of its 156 units at luxury-end 50%-JV Nouvel 18 (TOP 2013) has been sold and its Residences at W Singapore Sentosa Cove (TOP 2012) is only 10% sold. Recall also, CDL's hotel REIT, CDL Hospitality recently reported weak 3Q4 earnings, with DPU falling 1.1% y/y to 2.61cents while DPU for 9M14 fell 2.4% y/y to 7.86 cents. ADR at CDL-HT hotels dipped 4.1%. Rolling over RNAV est to end-2015, trimming RNAV est to $12.84 and maintaining peg to -1sd of 30% discount to RNAV, TP is lowered from $9.08 to $8.99