CDL Q1 net profit slips 16.3% to S$80m

PROPERTY and hotels group City Developments Limited (CDL) has posted a 16.3 per cent drop in group net profit to S$80.0 million for the first quarter ended March 31, 2018 from the S$95.6 million net profit in the year-ago period.

The lower bottomline was attributable to compressed profit margins for The Criterion executive condo (EC) - compared with higher profit margins achieved for the year-ago period from projects such as Coco Palms, D'Nest and Suzhou Hong Leong City Center, as well as the absence of contribution from Commonwealth Towers, a joint venture project that was completed and sold out last year.

CDL also noted that while its New Futura condo in Leonie Hill Road has achieved stellar sales performance since its launch in January 2018, profits were booked only for those units the sale of which was legally completed in the quarter.

The group's revenue rose 35 per cent to S$1.06 billion in Q1 FY2018 from S$783.7 million in Q1 FY2017. The increase was propelled by the completion of The Criterion EC in Q1 2018. Under prevailing accounting standards, revenue and profits are recognised in entirety upon obtaining Temporary Occupation Permit (TOP) for an EC project, CDL explained.

The group also benefitted from the maiden contribution of New Futura as well as continued contributions from Coco Palms and Suzhou Hong Leong City Center.

The counter closed 2 Singapore cents lower at S$12.53 on Friday.

Earnings per share slipped 16.2 per cent to 8.8 Singapore cents for Q1 FY2018 from 10.5 Singapore cents in Q1 FY2017.

The group's balance sheet remains healthy with S$3.6 billion of cash and bank balances.

The group, together with its joint-venture associates, sold 459 units including EC units, with a total sales value of S$792.6 million in Q1 2018 (Q1 2017: 293 units with total sales value of S$477.1 million) -reflecting a 66 per cent increase in total sales value compared to Q1 2017.

In the first quarter, the group boosted its Singapore residential landbank with the acquisition of three sites at state land tenders - in Handy Road, West Coast Vale and Sumang Walk in Punggol

Including the Amber Park collective sale site acquired in October last year (with about 600 units planned for) and existing unlaunched projects, the group now has a pipeline of over 3,000 residential units.

CDL also said that the group has four upcoming Singapore residential property launches lined up, in view of the improving market conditions. First off is Phase 2 of New Futura - the 60-unit North Tower - this weekend. CDL's joint venture project, the 190-unit South Beach Residences on Beach Road, is expected to be soft launched in the third quarter of 2018. The group is also planning for its West Coast Vale project to be launch-ready in the fourth quarter of this year.

Concurrently, it is actively working on the Amber Park en bloc site, which has received its provisional permission, and plans to launch the project in the first half of next year.

CDL is also upbeat about prospects for Singapore office rentals, on the back of limited supply completion this year and a positive economic outlook.

Distrii, one of the group's strategic investments into disruptors, will also soft open its first international coworking centre at Republic Plaza this month. Spanning 62,000 square feet (sq ft), the centre is the single largest coworking facility in Singapore and is expected to be fully operational

by the third quarter of 2018.

CDL executive chairman Kwek Leng Beng said: "It was a strong quarter for our Singapore residential business. Our new launches have received overwhelming response, with The Tapestry emerging as Singapore's top-selling project for March . . .We will continue to seek strategic bids to bolster our local land bank but will remain highly selective and disciplined.

"In addition to organic growth, given our strong balance sheet, acquisitive growth is also on our radar and we will continue to prudently seek suitable opportunities that are synergistic with our core real estate business."