Despite facing impact from Covid-19 on all segments, City Developments Limited (CDL) is fixed on long-term recovery, with the hospitality sector expected to rebound after a vaccine is found, say analysts. PhillipCapital analyst Natalie Ong is maintaining “buy” on the company with a lower target price of $10.68 from $11.82 previously.

“Hotel operations accounted for 82% of decline in revenue due to closure of 28% of hotel inventory and lower revenue per available room (-56.6%) and lower sales value from few units sold from mass market projects in 1H2020 vs ultra-luxury projects in 1H2019,” writes Ong in an August 24 note. 

Ong notes that all segments of CDL were impacted by Covid-19, with losses in the hospitality segment expected to continue despite cost-cutting measures. The segment recorded a pre-tax loss of $208.2 million due to the temporary closure of 28% of the Group’s 152 hotels, $33.9 million in impairment losses on eight hotels (six in US, one in UK, and another in Europe), and $7.0 million in doubtful receivables for two hotels which have payment difficulties due to Covid-19.

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