City Dev

City Dev: 54% owned M&C Hotels (MLC LN) reported 3Q net profit of £75.9m (S$154.4m), +116% yoy, on revenue of £242.4m, +30% yoy.
Revenue per available room (RevPAR) was up 9.4% yoy, driven by an increase in avg room rates.
Despite the higher qtrly profit, M&C warns that it is cautious about the short-term outlook, given early signs of a slowdown in spending by its business customers. It also notes that the continuing toll of natural disasters and weather-related items will have a damaging impact in certain business sectors in the region as well as tourism. But mgt does not anticipate a repeat of 2008.
M&C expects 4Q performance to be helped by demand from Asia, which accounts for >50% of grp's total sales.

JPM notes City Dev will report 3Q11 results on 10 Nov, but does not expect this to be a significant sh px driver. Downgrades the stock to Neutral with TP $10 from $13, following an update of assumptions underpinning RNAV estimate ($13.26/sh), to account for lower margins from property devt and lower returns from invmt properties as the cycle peaks.
Expects the stock to trade within $8.50-11.50 range with the lower bound set at 1 s.d. below historical avg discount to RNAV and the higher bound at adjusted book value at $11.74/sh.