CDL

CDL: 1Q15 results in line, with net profit of $123.0m (+2.8%) on revenue of $814.9m (+11%). Top-line was led by contributions from property development projects (+16% to $298.6m), Hotel operations (+6.2% to $376.0m) and rental properties (+4.3% to $99.2m).

Meanwhile, overall Gross margin fell to 45.5% from 48.3%.

Key projects contributing to the property development segment during the quarter included Coco Palms, D’Nest, H2O Residences, Jewel @ Buangkok, HAUS@SERANGOON GARDEN, The Palette and UP@Robertson Quay. Pre-tax (PBT) margin for the segment inched down to 4.3ppt to 32.7% due to lower profit margins achieved for projects launched recently.

Hotel operations was led by a 5.8% increase in global RevPar at Millenium & Copthrone, as well as 5 new hotels acquired in 2014 and better performance from refurbished hotels. PBT margin for the segment was stable at 9.0%.

Meanwhile, the rental properties segment remained relatively steady with PBT margin stable at 37.2% (1Q14: 39.4%).

Bottom-line was weighed by 13.8% rise in admin expenses to $128.1m, as a result of higher salaries and related expenses and depreciation arising from the acquisition of 5 hotels by the group.

Additionally, other operating expenses rose 15.5% to $97.8m, due to higher professional fees and property tax and insurance incurred.

JV profits more than doubled to $38.5m, mainly due to full profit recognition from executive condominium, The Rainforest which obtained TOP in Mar ’15.

Going forward, CDL guided that in light of the subdued domestic property market, the group is accelerating its diversification strategy across two dimensions – firstly, expanding its core real estate development business overseas and secondly by developing an unlisted funds management business.

Yet, even as the group expands overseas and works actively to develop new platforms, its investment in Singapore will remain the mainstay of its business.

Going forward, Maybank-KE believes that Singapore’s property market is past tightening and expect cooling measures to be lifted in the year ahead. As one of the largest developers in CDL is a good proxy to benefit from such a move. Further plans to diversify geographically could also underpin its medium-term growth.

CDL currently has a net gearing of 27% trades at a 25% discount to its RNAV of $13.41.

Latest broker ratings:
Maybank-KE maintains Buy with TP of $11.40
CIMB maintains Hold with TP of $10.90
CS maintains O/p with TP of $12.25
DBS Vickers maintains Buy with TP of $11.54
Deutsche maintains Buy with TP of $12.40
UBS maintains Buy with TP of $10.45