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City Developments - What does it take for stock to reach S$10?
Wednesday, May 20, 2009
CityDev's share price has risen by over 88% since its lows of Mar 09 on improved transaction volumes in residential properties. While this is positive, the group is not a pure residential player, with 65% of its RNAV emanating from commercial and hotel assets. In a recovery phase, the stock typically trades at 1.8x P/BV. Our analysis indicates that bullish assumptions would be needed to justify this level. Physical values would basically need to revert to early 2007 levels. With physical supply looming and credit remaining tight, this prospect remains uncertain. We raise our FY09-11 core EPS estimates by 1-9% on more aggressive ASP assumptions. Our end-CY09 RNAV and target price (parity to RNAV) accordingly rise from S$6.81 to S$7.31. We are bearish on the stock at current valuations but would be buyers on any pullback. Maintain Underperform.
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City Development
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