Hot stock: CDL soars 4.3% on Sincere divestment, increased stakes in Shenzhen Tech Park

SHARES of City Developments (CDL) C09 rose on Monday morning after the property group on Friday announced it had exited its investment in China-based Sincere Property Group for a consideration of US$1, while raising its stake in a technology park in Shenzhen.

Its shares were trading at a high of S$6.96 as at 9.53am on Monday, up S$0.29 or 4.3 per cent, with 3.6 million shares changing hands.

No married deals were recorded, according to ShareInvestor data.

CDL shares have since eased slightly to trade at S$6.94 as at 10.59am, up S$0.27 or 4 per cent. It remains the top traded counter by value, with 4.8 million shares worth S$33 million changing hands.

Late on Friday night, the property developer announced an agreement to sell its 63.75 per cent interest in HCP Chongqing Property Development (HCP Cayman) to an unrelated third party incorporated in the Republic of Seychelles. HCP Cayman holds an 80.01 per cent equity interest in Sincere.

Concurrently, CDL is increasing its stake in a company that owns 65 per cent of Shenzhen Longgang Tusincere Tech Park (Shenzhen Tech Park). The transfer represents partial repayment of a loan owed by Sincere to a wholly-owned subsidiary of CDL.

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The latest transaction will make Shenzhen Tusincere a wholly-owned subsidiary of CDL. The latter will now have direct operational control over the project management of Shenzhen Tech Park and be in a position to ringfence its investment in the property.

The transfer will also further reduce CDL's financial exposure to Sincere, which was S$117 million at end-June. CDL said the reduction in exposure would be "by the fair value" of the transfer but did not provide the amount. It said it will "continue to assess the recoverability of the remaining balance of its financial exposure".

READ MORE:

• Analysts sanguine on CDL's decision to sell Sincere Property for US$1

• CDL offers three-cent signal that recovery is underway, but value-unlocking is still key