City Developments (CDL) reported a 1H10 PATMI of $304m, a 36% improvement yoy, led by strong property development profits, which accounts for about 53% of 1H10’s pre-tax profits. Profits from three sold-out or substantially sold-out projects have not yet been recognized; at least two of which should feature in 2H10. , CDL’s hotel business under Millennium & Copthorne (M&C) is showing strong signs of recovery, led by a strong yoy RevPAR growth of 33% in Singapore.
A new subsidiary, CDL China Limited (CDLCL), has been set up to drive CDL’s expansion plans in China. CDLCL has an initial capital of S$300m to look for investment opportunities in Tier 1 and 2 cities, ranging from residential to commercial developments. Going forward, we expect even stronger earnings in the 2H, as at least two development projects start contributing to earnings. KE maintain BUY with a TP of $13.80, pegged at a 15% premium to its RNAV of $12.00.
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