OCBC bullish on CDL’s investment in China’s mamahome

SINGAPORE — OCBC Investment Research has reiterated its Buy call on City Developments (CDL) after Singapore’s second largest-listed developer announced this week its foray into the fast-growing Chinese online apartment rental segment with a 100 million yuan (S$20 million) investment in mamahome.

“We are overall positive on this investment, given its relatively manageable quantum and that it gives the group exposure to a business segment with significant potential for growth and future synergies,” said Mr Eli Lee, an analyst at OCBC, which has a S$9.89 fair value estimate for CDL stock. CDL shares closed at S$9.11 — up 0.6 per cent — yesterday, while the benchmark Straits Times Index ended flat at 2,894.48.

The investment, which will see CDL take a 20 per cent stake in mamahome, gives it an immediate foothold in a booming sector in Asia’s largest economy.

As a one-stop solution for both apartment owners and rental customers, mamahome provides an online booking website, online management software, and other value-added services including housekeeping, renovation, 24-hour concierge and call centre. In addition, mamahome provides management for its own brands of serviced apartments: Suisse Place, Locca and Login.

Mr Mark Yip, CDL Chief Marketing Officer and CDL China CEO, said: “Our partnership with mamahome provides an immediate entry into a fast-growing sector driven by business and leisure travel in China ... Operating under an asset-light model with a focus on Internet expansion, mamahome represents an efficient manner to grow market share and can also serve as a good platform to enhance leasing efforts for the group’s residential leasing properties and serviced apartments.”

Founded in 2014, mamahome caters to the rapidly growing demand for mid- to long-term leasing from leisure travellers to business executives on assignments and postings. There are now more than 100,000 apartment listings on mamahome spanning over 20 cities in China. More than 75 per cent of the apartments are in the key gateway cities of Shanghai, Beijing and Guangzhou.

CDL’s investment will be made through its wholly-owned subsidiary CDL China. After the investment, mamahome will be held jointly by Shanghai Chongfu with 56 per cent, E-House Capital with 24 per cent and CDL China with 20 per cent.