SINGAPORE (Feb 29): OCBC is raising its “buy” call on City Developments with higher $8.67 fair value.

In a Friday report, lead analyst Eli Lee says the group’s asset and income profile has become significantly more robust after active diversification into international market over the last five years.

“As at end 2015, we note that 45% of total assets fall in overseas markets while 51% of total assets also fall into the group’s recurring income segments,” says Lee.

In FY15, the group made strong progress in China with several successful launches over the year. City Developments’ UK real estate development platform have so far acquired seven freehold properties for GBP400 million ($781.5 million), out of GBP550 million that had
been set aside for deployment.

The group expects to secure the permits for the construction and sales for its condo project in Tokyo’s Minato ward by end 2017 and also re-entered the Australian market with a A$275 million ($276.2 million) condo project in South Bank, Brisbane.

In Singapore, the group reported that both ECs launched in 2015, The Brownstone and The Criterion, were 55% and 15% sold, respectively, with other launched projects also registering “reasonable sales” over the year.

In 4Q15, City Developments’ PATMI increased 6.6% to $410.5 million from a year ago mostly due to gains from the monetisation of three office assets through the group’s second Profit Participation Securities Platform in Dec15; a maiden $12 million contribution from the sale of Emerald House in the UK and higher profit recognition from development projects in Singapore.

In FY15, PATMI accumulated to $773.4 million, up 0.5% from $769.7 million last year.

“We judge these results to be broadly in line with expectations after accounting for one-time gains and extraordinary items,” says Lee.

A final dividend of 8 cents and a special final dividend of 4 cents have been proposed.

As at 11.51am, City Developments were trading 0.56% higher at $7.24.