Lee has cut his FY2025/2026 core patmi by 18.6%/2.4% to $434.6million/$535.0 million after taking into account these factors.
Lee’s lowered target price of $9.01 is set at a 40% discount to his Restated Net Asset Value (RNAV) of $15.01, vs CDL’s reported $19.86 including revaluation surpluses of its investment properties and hotels, near where it traded at during the past few residential downcycles triggered by cooling measures.
His key assumptions include a 1%-3% annual rise in Singapore residential prices in FY2025 to FY2027, flat cap rate changes in Singapore office grade A rents in FY2025 to FY2027, flat cap rate changes and a 2%/3%/3% rise in FY2025/FY2026/FY2027 revenue per average room (RevPAR) in hospitality, and flat cap rate changes and a 0.5%-2% rise in Singapore retail rents per year.
The key downside risks to Lee’s investment thesis that could impede the stock from reaching its target price are weak take-up for residential launches; the introduction of additional cooling measures; sharp economic slowdown; over-expansion in overseas geographies; and execution issues in turning around the M&C platform.
See also: UOB Kay Hian initiates ‘buy’ on Lum Chang Creations with target price of 39 cents
Shares in CDL closed 3 cents higher or 0.511% up at $5.90 on July 18.
