The research team at OCBC Investment Research has downgraded City Developments Limited (CDL) to “hold” after CDL’s shares rebounded by some 40.5% as at July 23 from its trough in April. The team has, however, kept its fair value estimate of $6.01, pending CDL’s results release for the 1HFY2025 ended June. CDL will release its results on Aug 13.
In its July 24 report, the team notes that there have been more positive developments including CDL’s divestment of its 50.1% interest in the South Beach mixed-use integrated development to its joint venture (JV) partner, IOI Properties Group. The stake was divested at an agreed property value of $2.75 billion on a 100% basis, or a 3% premium to the property’s valuation of $2.67 billion as at Dec 31, 2024.
As such, the team notes that CDL is likely to receive $834.2 million in proceeds, which will allow the group to reduce its gearing and redeploy capital. The proceeds may also result in a special dividend to shareholders, the team suggests.