Property Development Main Contributor — Property development accounts for 58% of 1Q09 PBIT of $119.3m despite falling 56% vs. a year back. Projects that contributed include City Square Residences, Botannia, One Shenton, Cliveden & Tribeca. PBIT from hotel operations fell 60% yoy at the back of slump in RevPar, while PBIT from rental properties managed an increase of 47% on improvement in occupancy and rental rates from a year earlier. However, portfolio occupancy has fallen from 94% in 4Q08 to 91% as at 1Q09.
Project Updates — More than 250 units of the 336-unit The Arte have been sold to-date and City Dev will prepare to launch the former Hong Leong Garden Condominium by 4Q09. On the South Beach development, City Dev & its JV partners are said to be in the final stages of negotiating for re-financing of its land and will review and refine plans given its 2016 completion timeline. Construction costs are expected to ease as well.
Sell, TP S$6.28 — Stock has run a massive 98% from its Mar-09 trough and is now trading at a 35% premium to our RNAV of S$5.98 and at 32% to its latest book value of S$6.11. We think a hefty premium is not justified until some pricing power on the physical market returns. Maintain Sell, TP S$6.28.
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