• No financials were provided for the 3Q23 operational update. The group’s net gearing ratio (after factoring fair value on investment properties) now stands at 58% following the completion of various acquisitions in 2023.
• In Nov 2023, the group announced a proposal to buy back up to 10% of its preference shares through an off-market equal access scheme at S$0.78 in cash for each preference share.
• We maintain BUY with an unchanged TP of $8.22, a 45% discount to RNAV of S$14.94. No change in our forecasts. We view CDL as a proxy for the Singapore residential market and hospitality recovery. Asset monetisation, unlocking value through AEIs and redevelopments, establishing a fund management franchise, and faster-than-expected recovery in the hospitality portfolio are potential catalysts for CDL, which could help narrow the discount between CDL’s share price and RNAV.

The Positives

• Singapore residential market remained resilient despite cooling measures. In 3Q23, the group and its joint venture associates sold 183 units with a total sales value of S$325mn (3Q22: 95 units with a total sales value of S$281mn). Sales were largely driven by the launch of The Myst in July 2023, with 169 units (41%) sold to date at an ASP of S$2,065 psf. Looking ahead, the group plans to launch Newport Residences in 1H24 after it was delayed due to the cooling measures, as well as the 512-unit Lumina Grand EC at Bukit Batok West Avenue 5 in 1Q24. We anticipate strong demand for Lumina Grand EC as it is near three MRT stations and the new Anglo-Chinese School (Primary), which is relocating to Tengah in 2030. Also, the group has secured a 155k sq ft residential Government Land Sales (GLS) site at Champions Way for S$295mn (or $904 psf ppr) in Sep 2023, pipping five other keen competitors. This project is slated for launch in 2H24 and will comprise about 350 residential units.

• Hospitality segment continues to improve. 9M23 portfolio RevPAR rose 31.6% YoY to S$163.6, exceeding pre-COVID 9M19 by 20% mainly due to higher room rates. All regions had higher RevPAR YoY, with Asia and Australasia having the greatest improvement of 62.1% and 67.5%, respectively. We expect RevPAR to continue growing in FY24, albeit at a slower pace. The group’s strategic expansion of its hotel portfolio continued in 3Q23 as it acquired the 408-room Nine Tree Premier Hotel Myeongdong II in Seoul for KRW140bn (c/S$143.9mn), and the 256-room Bespoke Hotel Osaka Shinsaibashi in Osaka for JPY8.5bn (S$78.5mn).

• Expansion of the living sectror. In Sep 2023, the group acquired a residential rental portfolio in Tokyo comprising 25 freehold assets with 836 units for JPY 35bn (S$321.9mn). It now owns 35 operational Private Rented Sector (PRS) assets in Japan with an occupancy of above 95%.

• Buying back shares to strengthen capital structure. In Nov 2023, the group announced a proposal to buy back up to 10% of its preference shares through an off-market equal access scheme. Preference shareholders are entitled to sell 10% of their preference shares owned for S$0.78 in cash for each preference share. After the completion of the offer, the group plans to cancel any preference shares purchased, reducing its finance cost in relation to the coupon payment of the shares.

The Negatives

• Nil