• 2Q17 results in line
• Launching New Futura and Tampines site
• Upgrade to BUY

Impact From Absence of Lush Acres Contribution

2Q17 PATMI dipped 7.7% YoY to S$154.6m mainly due to the absence of contributions from Lush Acres EC for which profits were wholly recognized on completion in the 2Q16. Excluding the impact of Lush Acres, we understand that 2Q17 PATMI would have increased 43.4% YoY. In terms of the topline, 2Q17 revenues similarly dipped 21.8% from the absence of Lush Acres’ revenues, with contributions from Gramercy Park, Coco Palms, The Venue Residences in Singapore and Hongqiao Royal Lake, Shanghai and Hong Leong City Center (HLCC). We deem these results to be in line with expectations. A special interim dividend of 4.0 cents per share has been declared.

Well Positioned to Benefit From SG Housing Upturn

CityDev indicates that they are well positioned to benefit from an upturn in the Singapore residential market and sold 691 units in 1H17, more than double that in the same period last year. Looking ahead, they look to launch New Futura and its new condominium projects in Tampines, Singapore and Teddington Riverside, UK over the next 12 months.

In China, the group continues to see healthy demand at the HLCC, with 1,118 (81%) out of 1,374 units and 195 (45%) out of 430 units in Phase 1 and 2, respectively, sold to date. In addition, the group has also announced a A$35m investment into the luxury senior housing sector in Australia and will collaborate with Waterbrook Lifestyle Resorts to develop a luxury five-star retirement village in Bayview, Sydney.

The 20k sqm freehold site, currently at the planning and design stage, will be named Waterbrook Bayview and is slated for completion in 2020. After updating our valuation model with our latest assumptions and firmer ASPs, our fair value estimate increases to S$12.39 versus S$10.50 previously. Upgrade from Hold to BUY.

Source: OCBC Research - 14 Aug 2017