CityDev’s 2Q15 PATMI decreased 3.2% YoY to S$133.5m mainly due to lower contributions from its property development and hotel segments, partially offset by higher other operating income (realization of investments in a private real estate fund) and higher financial income. In terms of the topline, revenues for the quarter also dipped 4.2% YoY to S$824.9m mostly due to weaker numbers from property development (down 18% YoY to S$268m).

Overall, we judge 2Q15 earnings to be broadly in line with expectations. Management indicates that the office component of the South Beach Tower is now 96% leased and the 654-room hotel will be opened in Sep 2015. In addition, an EC project in Yishun, The Criterion, will likely be launched in 4Q15. A special interim dividend of 4.0 S-cents is declared.

We will have an analyst briefing later this morning and, in the meantime, maintain HOLD with our fair value estimate of S$9.53 under review.

Source: OCBC Research - 13 Aug 2015