Broker's take: OCBC downgrades CDL to 'hold'; cuts fair value to S$9.59
ANALYSTS at OCBC Investment Research have downgraded their call on mainboard-listed City Developments Limited (CDL) to "hold" and slashed the fair value of the stock to S$9.59 from S$15.78 as the brokerage expects the property developer to be one of the worst hit among developers under its coverage.
This comes as property and banking stocks took a hit on Friday after the Singapore government's announcement of a set of cooling measures, which include a hike in stamp duty and tighter loan limits, on the Singapore residential property late on Thursday.
In its research note, OCBC said that the implications of such measures are likely to be "weaker demand from both locals and foreigners, coupled with greater caution on future land bids and en-bloc transactions by developers".
With regard to the impact of cooling measures on CDL, OCBC analyst Andy Wong expects the developer's "local residential sales momentum and margins to come under pressure".
This is in part due to CDL being a key beneficiary of the Singapore residential market upcycle due to its large land bank. This is likely to work against the developer after the new measures were introduced, OCBC said. CDL's unsold inventory, including projects that are in the pipeline were also cited as a key risk.
The stock's rebound is also expected to be muted, OCBC said: "Although CDL's share price slumped 15.6 per cent to S$9.46 on July 6 after the cooling measures were announced, we believe the negative investor and buyer sentiments may curtain a meaningful rebound in its share price in the near future."
CDL shares were trading up S$0.36 or 3.8 per cent at S$9.82 at noon.
BT is now on Telegram!
For daily updates on weekdays and specially selected content for the weekend. Subscribe to t.me/BizTimes
Companies & Markets
DBS customers unable to log into digibank, PayLah! on Thursday
NYSE-parent ICE’s revenue misses as muted IPO markets offset record energy trading
Amazon bets big with CrowdStrike on cybersecurity products
Goldman Sachs scraps EU-era bonus cap for top bankers in UK: source
Thomson Reuters lifts 2024 forecast on first quarter revenue result
US: Wall St opens higher after Fed leaves interest rates alone