CDL chairman optimistic about outlook for 2020

Singapore

DESPITE the disruption and uncertainty to businesses caused by the Covid-19 outbreak, City Developments Ltd (CDL) executive chairman Kwek Leng Beng is upbeat.

"We view the outlook for 2020 with an optimistic prism. With the collective efforts from government, businesses and individuals, the situation will stabilise and recover in time," Mr Kwek said.

The group posted a 12.5 per cent rise in net profit to S$87.7 million for the fourth quarter ended Dec 31, up from S$77.9 million a year ago.

This was thanks to increased revenue contribution across its core business segments, the property and hotels group said on Wednesday.

The group and its joint venture (JV) partner Hong Leong Holdings plan to launch a 566-unit private residential project in Sims Drive in the first half of this year.

In the second half of this year, there is a possibility of CDL launching its proposed condo development on the Irwell Bank Road site, which it clinched at a state tender that closed earlier this year, if it can clinch the necessary approvals in time, said CDL's group general manager, Chia Ngiang Hong.

In the first half of next year, CDL and its JV partner CapitaLand plan to launch about 700 residential apartments for sale in their integrated redevelopment on the Liang Court site.

CDL group chief executive officer Sherman Kwek said at the results briefing that there is certainly a possibility of the group redeveloping Fuji Xerox Towers, tapping the CBD Incentive Scheme. "We could get as much as maybe a 25 per cent uplift in GFA (gross floor area). I think it certainly makes the numbers very attractive. So we are studying and looking at that in a very deep detailed (manner)."

The group's City House would also qualify for this scheme but CDL is unlikely to tap the scheme, given the long lease for anchor tenant WeWork.

Mr Sherman Kwek told BT on the sidelines of the group's results briefing that it will not be continuing with quarterly reporting, although it will release operational highlights every quarter.

CDL on Wednesday broke from tradition and provided its revalued net asset value per share, of S$16.46 as at Dec 31, 2019. Unlike most of its peers, CDL states its investment properties at cost less accumulated depreciation and impairment losses. It does not adopt fair values on its investment properties. As a result property analysts from stockbroking houses have had to come up with their own estimates of CDL's RNAV.

However, CDL's group chief financial officer Yiong Yim Ming said the RNAV figure the group unveiled took into account only the fair value on investment properties; hotels and development properties were still reflected at cost.

While the group's chairman looked at the bright side of things, he acknowledged that "hotels will go from bad to worse before becoming better", adding: "That's my view. It will take at least a few months, maybe four to six months."

The group's Singapore hotels are running at about 40-50 per cent occupancies here, in line with the rest of the market, said CDL's group chief strategy officer Kwek Eik Sheng.

Earnings per share for Q4 FY2019 came in at nine Singapore cents, up 13.9 per cent from 7.9 Singapore cents in the year-ago period.

Revenue rose 20.1 per cent on the year to S$946.9 million for Q4, from S$788.3 million previously.

The counter closed 29 Singapore cents lower at S$10.37 on Wednesday. The group announced its results before the stock market opened.

The property development segment's revenue was backed by several Singapore projects including The Tapestry, Whistler Grand and Amber Park, as well as the fully sold 32 Hans Road project in the UK. For the hotel operations segment, the inclusion of W Singapore - Sentosa Cove into the group's hotel portfolio in Q2 2019 bolstered the increase in revenue. Meanwhile, in the investment properties segment, the acquisition of the UK's Aldgate House and 125 Old Broad Street in late 2018 boosted revenue for the latest quarter.

In addition to a final ordinary dividend of S$0.08 per share, the board is also recommending a special final ordinary dividend of S$0.06 per share. Including the special interim ordinary dividend of S$0.06 per share paid in September 2019, the total dividends for FY2019 amount to S$0.20 per share, unchanged from FY2018.

Once approved by shareholders at the annual general meeting to be held on April 28, the proposed dividends will be paid on May 21. For the full year, CDL's net profit edged up by 1.3 per cent to S$564.6 million from S$557.3 million, although revenue tumbled 18.8 per cent to S$3.43 billion from S$4.22 billion in the year-ago period.

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