Brokers' take

City Developments Ltd (GDL) | OVERWEIGHT Oct 5 close: S$11.41 Target price: S$12.30 JPMorgan, Oct 4

An 80-20 JV between CDL and its parent, Hong Leong Group, has acquired Amber Park for S$907 million or S$1,515 per square foot (psf), which could be lowered to S$1,443 psf after factoring in another 10 per cent GFA for balcony. This translates to profit before tax (PBT) margin of 5-10 per cent on a selling price of S$2,100-2,200 psf and a new record for the Amber Road precinct.

We expect this deal to pave the way for more nearby en bloc deals to close, while UOL's acquisition cost of S$1,063 and S$1,429 psf for 45 Amber Road and Nanak Mansions respectively now looks competitive. This represents CEO-designate Sherman Kwek's first acquisition since his August appointment, and may signify CDL's renewed focus on Singapore given improved fundamentals, in our view.