City Development Seeks to Privatise Majority-Owned Millennium and Copthorne

City Developments Maintains Diversification Initiatives, Seeks Further U.K. Opportunities

City Development's Investment Properties and Hotel Business Offsets Slower Residential Growth.

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Equity Bottom-Up

A better performance for its hotel operation Millennium and Copthorne provided an uplift to <a href="https://www.smartkarma.com/entities/57" target="_blank" data-smartkarma-citation="entities:57:1">City Developments Ltd (CIT SP)</a>, or CDL's, second-quarter result. Along with the result announcement, the developer also noted that CEO Grant Kelley will depart the company in December to join a listed company headquartered in Melbourne. While Kelley is departing 1.5 years prior to the completion of the five-year target set forth in 2014, the developer is well on its way to achieving SGD 5 billion of acquisitions and SGD 5 billion in funds under management. The group has acquired SGD 3.5 billion of assets, and the launch of three profit participation securities, or PPS, resulted in close to SGD 3.5 billion of assets under management. With the divestment of its Singapore assets into the PPS, combined with the acquisition of overseas projects, the strategy has also diversified the group's operations geographically. As previously noted, the funds management business provides an additional recurring revenue stream to its hotel and investment properties businesses, balancing out the more cyclical residential development business.There is no change in our thesis for the developer. With a cash balance of SGD 3.3 billion and a prudent balance sheet, we still expect the developer to acquire projects offshore, in line with the above strategy. From a valuation perspective, CDL's share price sustained its appreciation in the second quarter and converged toward our unchanged fair value estimate of SGD 12. While its share price has eased in the past week, the developer is now trading at a slight discount to our fair value estimate, and we would require a larger margin of safety before recommending the stock.Analyst: Michael Wu, CAIA

A better performance for its hotel operation Millennium and Copthorne provided an uplift to City Developments Ltd (CIT SP), or CDL's, second-quarter result. Along with the result announcement, the developer also noted that CEO Grant Kelley will depart the company in December to join a listed company headquartered in Melbourne. While Kelley is departing 1.5 years prior to the completion of the five-year target set forth in 2014, the developer is well on its way to achieving SGD 5 billion of acquisitions and SGD 5 billion in funds under management. The group has acquired SGD 3.5 billion of assets, and the launch of three profit participation securities, or PPS, resulted in close to SGD 3.5 billion of assets under management. With the divestment of its Singapore assets into the PPS, combined with the acquisition of overseas projects, the strategy has also diversified the group's operations geographically. As previously noted, the funds management business provides an additional recurring revenue stream to its hotel and investment properties businesses, balancing out the more cyclical residential development business.There is no change in our thesis for the developer. With a cash balance of SGD 3.3 billion and a prudent balance sheet, we still expect the developer to acquire projects offshore, in line with the above strategy. From a valuation perspective, CDL's share price sustained its appreciation in the second quarter and converged toward our unchanged fair value estimate of SGD 12. While its share price has eased in the past week, the developer is now trading at a slight discount to our fair value estimate, and we would require a larger margin of safety before recommending the stock.Analyst: Michael Wu, CAIA

CDL、ホテル事業の好調により第2四半期決算が好調に推移、CEOは12月に退任へ