City Dev

City Dev: Results below estimates. 1Q rev at $846.7m +9.4% yoy +17.4% qoq with net profit at $156.8m -44.5% yoy -4.0% qoq. Co also recorded divestment gains of $41m without which core net profit would be lower -15% yoy and -38% qoq. Development income fell 31% to $88m on absence of contribution from completed projects such as One Shenton, Cliveden and Livia making up 41% share of profit. Profit from hotel operations increase 30% to $40m on operating performance from Asia properties and cost measures. Overall RevPAR grew by 5.6% with double digit growth in KL, Jakarta, Beijing and Seoul. Profit from rental fell 75% to $36m due to asset disposals from last year. In 1Q two new developments were launched, The Rainforest EC at Choa Chu Kang with 94% sold to date and Bartley Residences a 702 unit condo with 290 out of 350 units sold in phase 1. Net gearing ratio excluding fair value gains was remained relatively low at 21%. Co is of the view that buying interest in mass mkt projects remained strong. Co is also preparing to launch a residential and hospitality integrated dev UP@Robertson Quay along Singapore River soon and landed housing dev, HAUS@Serangoon Garden. Its operations in Chongqing has so far not been affected and expects to cont to explore further investments in China. JP Morgan maintains Neutral with TP$10.00 Goldman maintains Neutral with TP$9.80 Deutsche maintains Sell with TP$10.09 Houses are of the view poorer results reflect either lower rev recognition or falling margins.