Management prudent in acquiring landbank. Management is comfortable with the current landbank of about 4.5m sqf and will acquire more land only if it feels the price is right. CDL is interested in the recent land releases from the government’s Reserve List and is the top bidder for the Chestnut Avenue site with a top bid of S$129.1m (S$280psf ppr), but feels that the reserve price of Laguna Park (S$844psf ppr) is quite high.
Construction work for South Beach to begin by 2010. CDL has completed financing arrangements for the South Beach project and is finalising the design. Construction work is expected to begin by 2010. Management expects to see some write-downs from the project in the current financial year mostly due to the decline in the value of office space.
Hotel occupancy likely to firm up. Advance room bookings in relation to Formula One races are rather disappointing. However, management expects occupancy levels to pick up as the event draws closer and to remain healthy in 2H09/2010 with other events like the APEC conference, opening of the integrated resorts and the Youth Olympic Games.
Maintain BUY; target price raised to S$13.50. We continue to see good value in CDL and maintain our BUY recommendation with a revised target price of S$13.50 pegged at a 15% premium to our 2009 revised RNAV of S$11.73.
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