City Developments’ Q2 revenue boosted by Lush Acres sales

SINGAPORE — Listed property developer City Developments yesterday reported a 32 per cent year-on-year rise in revenue to S$1.09 billion for its second quarter to end-June, largely due to sales at its executive condominium, Lush Acres. Net profit for the period, however, was up just 1.7 per cent at S$167.5 million from S$164.6 million previously, as earnings were moderated by a 56.9 per cent jump in cost of sales to S$652.3 million from S$415.8 million.

City Developments attributed the sharply higher top line to revenue and profit recognition from Lush Acres — a fully sold executive condominium that obtained its Temporary Occupation Permit in the second quarter. Located in the Sengkang area, Lush Acres comprises 380 units.

Improved performance by its property development business was partly offset by lower contributions from its hotel unit — Millennium & Copthorne — due to weaker performances in its key markets of New York and Singapore.

In a research note, OCBC Investment Research — which is maintaining its “Buy” recommendation on City Developments shares with a fair value estimate of S$9.89 — wrote: “We do expect a somewhat back-loaded FY16 in terms of profit recognition, particularly as contributions from its overseas development projects roll in from 2H16.”

OCBC noted that 31 units at the 174-unit Gramercy Park development have been sold, while the Jewel @ Buangkok, Coco Palms and The Brownstone are almost 100 per cent, 90 per cent and 73 per cent sold, respectively.

The group aims to launch the 519-unit Forest Woods development in Paya Lebar in coming months.

In central London, City Developments has obtained planning consent for a luxury care home development, which will comprise 34 two-bedroom apartments and a potential value of up to £200 million (S$349 million).

Looking ahead, City Developments expects to remain profitable this year while noting increased competition from local and overseas developers as well as contractors undertaking a dual role as developers, who have been submitting high bids for land in Singapore.

The property developer added that its robust balance sheet, high liquidity and conservative accounting policies give the group the firepower to continue investing overseas, given prevailing headwinds in the Singapore property market. It recommended a special interim dividend of 4 cents a share. Abdul Hadhi