Still, this is set at a 40% discount to Lee’s revalued net asset value (RNAV) of $15.01, compared to CDL’s reported $19.86 including revaluation surpluses of its investment properties and hotels.
Lee likes management’s commitment to its asset divestment initiative, which he says “could provide upside catalyst” to CDL’s dividend per share. He also thinks CDL is a proxy to Singapore’s ongoing residential upcycle, and the stock is trading at “undemanding valuations” of 0.73 times price-to-book and at a 51% RNAV discount.
In a Nov 17 update, CDL announced that it sold 88 units with a total sales value of $313.2 million in 3QFY2025, below the 321 units with a total sales value of $611.1 million sold in the same quarter last year.
For 9MFY2025, CDL sold 990 units totalling $2.5 billion in sales value, comparable to the 905 units with sales value of $1.8 billion reported in the same period a year ago.
See also: CDL sells Silicon Valley multi-family residential asset for US$143.5 mil
Like Citi’s Lee, CGS International’s Lock Mun Yee kept her “add” call and $8.97 target price unchanged in a Nov 18 note.
She says CDL reported “robust residential development operations, supported by good take-up at its new launches, while its investment properties continued to see high occupancy”.
“CDL continues to actively land bank, acquiring three land parcels year to date, with a potential of 1,400-1,500 units. This should underline earnings visibility, in our view,” says Lock.
See also: City Developments total sales value for 3QFY2025 at $313.2 mil with no new launches during quarter
CDL’s 9M2025 recurring rental income was backed by high occupancy of 97.3% and 96.9% at Singapore office and retail properties respectively, while pre-commitment for its Union Square Central office stood at 52%.
RHB upgrades CDL
But the biggest change comes from RHB Bank Singapore’s Vijay Natarajan, who upgraded CDL to “buy” from “neutral” in a Nov 19 note, along with a significantly higher target price of $8.50, up 73% from the previous target price of $4.90.
This is Natarajan’s first report on CDL since June 6. He had downgraded CDL to “neutral” on March 3, following the public spat between CDL group CEO Sherman Kwek and his father, CDL board chairman Kwek Leng Beng.
Natarajan’s last target price prior to the saga was $7.30, issued on Nov 26, 2024.
“[CDL’s] share price has rebounded from the bottom in April, aided by a strong momentum in Singapore’s residential property market. We see legs in the current rally, driven by positive outlook for Singapore real estate sector, its renewed focus on asset divestments, and government policy measures supporting deep-value plays (thereby mitigating earlier corporate governance lapses),” writes the RHB analyst.
See also: CDL back on track with South Beach divestment while keeping pace with nature reporting
According to Natarajan, CDL is a key beneficiary of falling interest rates, as only 43% of its debt is on fixed interest rates, as at end-June; and 73% of its debt is due for refinancing by 2027.
Divestments remain a key priority, says Natarajan, with CDL completing the divestment of its 50.1% stake in South Beach integrated development for a net gain of $465 million in September, and Piccadilly Galleria for $65.5 million in November.
CDL has also put up Quayside Isle @ Sentosa for sale for $111 million, and is currently in negotiations with potential buyers.
Net gearing (including fair value on investment properties) has dipped to 69% as a result, down from 70% in 2QFY2025. CDL has a “healthy” interest coverage ratio of 4.0 times, up from 2.4 times at June 30.
OCBC a holdout
Meanwhile, OCBC Investment Research analysts have a contrarian “hold” call on CDL, but with a higher target price of $7.49, up from $6.87 previously.
CDL’s net gearing ratio of 69% “remains higher than CDL’s medium-term target gearing ratio range of high-50% to low-60% range”, notes OCBC.
“We believe the uncertain global economic outlook and impact of policy tightening measures rolled out previously could be potential dampeners to investor sentiment,” says OCBC in a Nov 18 note. “Furthermore, although the recent matter over the disagreement within CDL’s board has been settled and the court proceedings discontinued, we believe investors will be closely monitoring CDL’s execution and future corporate governance practices ahead.”
New divestment
These reports were issued before CDL’s wholly-owned subsidiary, Millennium & Copthorne Hotels, announced the divestment of a multi-family residential asset in the US for US$143.5 million to a US-based institutional investor on Nov 20.
The sale price for 1250 Lakeside Drive in Sunnyvale, California — part of the larger Silicon Valley area — is based on its net lettable area of 201,750 sq ft. Adjacent to 1250 Lakeside, the US$118 million M Social Hotel Sunnyvale is being developed with completion expected in 2H2026.
CDL group CEO Sherman Kwek says the sale of the “non-core, standalone asset” in the US with “limited operational scale” in the multi-family space “enables [CDL] to reduce gearing and redeploy the capital to maximise shareholder returns”.
“Since privatising Millennium & Copthorne Hotels in 2019, we have gradually adopted a more agile approach to optimise its portfolio, unlocking value from non-core and mature assets, enhancing financial flexibility and driving harmonisation,” adds Kwek in a statement. “This includes the divestment of various hotels in locations such as South Korea, the UK and the US, the collective sale of Tanglin Shopping Centre in Singapore as well as the deconsolidation of CDL Hospitality Trusts, which all resulted in substantial gains for the group.”
As at 11.23am, CDL shares are up 12 cents, or 1.66% higher, at $7.34.
