Excluding divestment gains and impairments, FY13 core PATMI came in at SGD516.9m (-4.4% YoY), in line with expectations.

With new CEO Grant Kelley on board, there is more emphasis on growing overseas. M&C recently saw a spurt in hotel acquisitions overseas.

Maintain SELL and TP of SGD8.30 as CDL remains Singapore-centric and needs time to build up its international business.

What’s New

CDL reported a PATMI of SGD225.6m for 4Q13 (-11.4% YoY, +83.3% QoQ). Excluding divestment gains and a SGD23.7m impairment attributed to a hotel in the US, we estimate core PATMI to be SGD225.6m (+11.2% YoY, +96.1% QoQ). Full-year core PATMI declined by 4.4% YoY to SGD516.9m. A final dividend of SGD 8.0 cts per share was proposed (total DPS of SGD 16.0 cts for FY13).

What’s Our View

CDL achieved creditable residential sales in 2013, selling 3,210 units (+34.0% YoY) with a total value of SGD3.3m (+19.4% YoY). With the property market softening, we expect its new launches to experience some margin compression, coupled with lower sell-through rates.

Full-year PBT from its hotel operations fell 36.1% YoY to SGD160.1m on weaker RevPAR from Singapore and the rest of Asia. Nevertheless, armed with a strong balance sheet, M&C is acquiring a hotel each in London, New York and Rome. Its GBP240m refurbishment is also still ongoing, potentially putting it in a position to benefit when the global economy improves. As it will take time for the internationalisation push to contribute to the bottom line, CDL remains largely Singapore-centric and we maintain our SELL recommendation.

Source: Maybank Kim Eng Research - 28 Feb 2014