"This adds further momentum to CDL’s solid residential track record and strengthens its income visibility over the coming years," says DBS, adding that most of its recent residential launches, such as Lumina Grand EC, Kassia, Norwood Grand, and Union Square Residences in 2024, as well as The Orie in 2025, have achieved healthy sell-through rates, leaving the CDL with a relatively low level of unsold inventory.
Meanwhile, CDL has been actively replenishing its landbank with sites acquired at Lakeside Drive, Woodlands Drive 17, and Senja Close.
DBS estimates that strong sell-through rates will lock-in around 40 cents upside to its revalued net asset value (RNAV).
While DBS's top picks for developers include UOL Group, with a target price of $8.8 and GuocoLand, with a target price of $2.50, it sees CDL, with a $9 target price, as a "standout".
For one, CDL is a large cap counter trading at an attractive valuation of 60% discount to RNAV, which is a steeper discount compared to UOL and GuocoLand.
A potential special dividend could also be on the cards when it reports its FY2025, supported by significant gains from the recent divestment of its stake in South Beach, estimated at 60 cents per share.
Citi Research's Brandon Lee also deems the 84% take-up rate as "unsurprising" given Zyon Grand's attractive product attributes such as its integrated project status, proximity to an MRT station, decent pricing and the presence of nearby amenities and schools, as well as the continued softening in mortgage rates.
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"With its unsold domestic residential landbank down to only [around] 2,400 units (translating to 1.6 years inventory cycle; 64/36/1% split between mass-market/high-end/mid-end), we expect CDL to be more proactive in four upcoming government land tenders (at Telok Banglah Road, Bukit Timah Road, Bedok Rise and Hougang Central) in November-to-December-2025," says Lee.
Despite CDL's share price outperformance, which is up 44% year-to-date versus the benchmark Straits Times Index's 17% increase, the analyst still likes CDL due to its undemanding valuations (the stock is trading at a 51% discount to its RNAV), expectations of further asset monetisation and the ongoing residential upcycle.
Lee has maintained his "buy" call and target price of $9.01.
CDL shares gained 2.04% to change hands at $7.51 as at 9.14 am.
