CDL

CDL: 3Q14 profits disappointed consensus, coming in only 4.7% higher y/y despite TOP of Blossom Residence EC and contributions from two new hotels, Chelsea Harbour and Novotel New York Times Square, adding 58.3% to top line growth, bringing revenue to $1.322b. Bottom line was lower on absence of significant divestment gains from non-core investment properties. Finance costs increased 51.1% y/y on fair value losses and higher interest expenses. On the projects, leasing at its South Beach office tower, slated for completion in 1Q15, is on track to achieving 90% occupancy by end of 2014, with 33% pre-committed, 50% firmed up and 10% under advanced negotiation. Management sees fragile prospects in Singapore’s residential market but is confident the company can weather the down-cycle. CDL has a healthy balance sheet and safe net gearing of 36% to cushion the impacts of slowing residential sales in Singapore. Overseas diversification is progressing well, but unlikely to plug the gap in Singapore’s slowing residential property market in the near term. Over 3Q, CDL had acquired a prime freehold site in Tokyo for upmarket condominium, obtained approval for four UK projects, and has two more UK car park developments in the pipeline. BVPS at $8.79, stock trades at 1.06x P/BV.