"We see CDL as a near-term tactical play with room for valuation catch-up," states Food in her Jan 15 note.
"It is a large-cap developer currently trading at a 50% discount to RNAV, even after the strong rally in share price, and also at a steeper discount compared to peer UOL Group," she adds.
Foo sees "multiple tailwinds" in CDL's favour in the coming years.
For one, there will be strong earnings visibility driven by largely pre-sold residential projects in Singapore and an attractive pipeline, including, most recently Newport Residences, which is part of the redevelopment of the former Fuji Xerox Towers. Prices start from just above $3,000 psf.
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Also, hospitality, largely operated under its M&C unit, remains a key growth engine. CDL had previously indicated a target of 500 hotels across the world via a mix of management contracts and franchise models.
"This approach is expected to enhance ROE while maintaining strategic flexibility and operational scalability," says Foo.
The company has taken firm steps to improve its capital management too, which will have the effect of unlocking additional debt headroom for deeper portfolio value.
Most significantly, CDL sold its stake in South Beach to its JV partner IOI Properties.
Foo expects more capital recycling activities to extract value from its portfolio.
She suggests that given CDL's "renewed" focus on delivering shareholder returns, there is a chance that the company will take some proceeds from the divestments and pay them out as special dividends estimated at between 65 and 70 cents when it announces its FY2025 next month.
CDL shares as at 9.34 am, changed hands at $9.14, up 2.12%.
