City Developments Limited (CDL) reported its 4Q17 results this morning which met our expectations. Revenue jumped 13.8% YoY to S$1,327.7m and this was driven by The Brownstone EC which obtained its TOP in Oct 2017. PATMI came in at S$186.7m, which was a decline of 23.4% as compared to the same period in the preceding year.

For FY17, CDL’s revenue was down marginally by 2.0% to S$3,828.6m, while PATMI of S$538.2m represented a dip of 17.6%, as its FY16 performance was boosted by a sizeable contribution from Hong Leong City Center in Suzhou. The latter formed 96.7% of our full-year forecast.

A final ordinary and special dividend of 8 S cents and 6 S cents per share was declared, respectively, and this culminated in total dividends of 18 S cents per share for FY17 (interim special DPS of 4 S cents), versus 16 S cents for FY16. Looking ahead, CDL is planning to launch a new 861-unit condominium The Tapestry in Mar this year, which is located along Tampines Avenue 10.

Separately, it was also announced that CDL had submitted the top bid for a Sumang Walk site together with its JV partner TID. The S$509.4m bid price translates into S$583.0 psf ppr, and was 4.8% higher than the second highest bidder. We estimate breakeven ASP of approximately S$950-S$1k psf. We will provide more updates after the analyst briefing.

Maintain BUY on CDL but our fair value estimate of S$15.30 is under review.

Source: OCBC Research - 28 Feb 2018