City Dev: Having de-rated and underperformed the sector by over 20% last year on weak fundamentals, uncertainties over the new strategy, index exclusion and selling by major shareholders, Deutsche sees limited room for downside surprise going into 2016.
Indeed risk looks biased to the upside as the group starts to launch projects overseas this year and continues to execute on its fund management platform.
Given the challenging outlook in Singapore and the company’s unproven track record overseas, the market is not valuing CDL’s development business, not even its S$853m unrecognized profit, based on Deutsche’s estimates . As the group starts to launch projects overseas in 2016, any positive take-up could translate into upside surprises
With the stock trading at closer to crisis levels at a 47% discount to RNAV, implying a 4% discount to its recurring business and zero valuation for its development business including unbilled profit, Deutsche believe City Developments offers defensive value. CDL is one of Deutsche’s top picks.
The house has a Buy call on City Dev with TP of $9.25
No comments:
Post a Comment