Closing the chapter on Sincere. CDL provided a S$1.7bn write down on its exposure to Sincere in 2H20, fully impairing its equity stake in Sincere. The sale of the equity stake in Sincere for US$1, which was announced on 10 September 2021, is CDL’s final attempt to turn the page on this chapter. In the announcement, CDL also reported the transfer of Sincere’s 10% effective stake in Shenzhen Longgang Tusincere Tech Park to the group, as partial repayment of loans extended to Sincere. This further reduces CDL’s exposure to Sincere to approximately S$85mn, while increasing CDL’s stake in Tusincere to 65% (Figure 1 and 2). CDL acquired its initial 55% stake in Feb21. As of 20 February 2021, 2224,933 sqm or 54% of the saleable area of Phase1-3 have been pre-sold, translating to sales proceeds of RMB7.2bn (c.S$1,477mn). Construction of Phase 4, the self-held office block, has not commenced.
Re-initiate with BUY and RNAV TP of S$9.19
CDL is trading at an attractive 49% discount to our RNAV/share of S$14.14. Asset monetisation and faster-than-expected recovery in hospitality portfolio are potential catalyst for CDL while recent AEIs and redevelopments should strengthen income stream and portfolio.