CDL Q1 profit slips 14.4% on subdued Singapore property development business

CITY Developments Limited (CDL) has posted a 14.4 per cent drop in first quarter net profit to S$105.34 million. Revenue eased 11.2 per cent to S$723.31 million for the quarter ended March 31, 2016.

The property and hotel group blamed the lower profit and revenue on subdued performance from the local property development business and the hotel operations segment.

There was reduced contribution from the group's completed residential projects and absence of profit from The Rainforest executive condominium (EC), which was recognised in its entirety upon obtaining its Temporary Occupation Permit in Q1 2015. Hotel operations were also impacted in key gateway cities by the competitive hospitality environment, leading to lower room rates and occupancy.

The group anticipates its overseas development projects to begin contributing to profit from the second half of 2016.

CDL also announced the acquisition of its first office building redevelopment property in the UK for £37.4 million (about S$73.5 million). Known as Development House, the property is strategically located at 56-64 Leonard Street in Shoreditch (north of the City of London), an area which enjoys strong demand for office buildings, given limited supply. The deal is to be completed in the UK on Wednesday. With this latest acquisition, CDL currently has a pipeline of 14 overseas development projects in Australia, China, Japan and the UK.

Earnings per share fell to 11.6 Singapore cents for Q1 FY2016 from 13.5 Singapore cents in Q1 FY2015. Net asset value per share fell to S$9.85 as at end-March 2016 from S$9.89 as at end-December 2015. The counter closed one Singapore cent higher at S$8.04 on Wednesday.