City Developments is back in the black with earnings of $129.7 million for 2HFY2021 ended Dec 2021, putting behind losses $1.92 billion incurred this time last year because of write-offs.

For the full year, the leading property and hotel player reported earnings of $97.7 million, versus full year losses of $1.92 billion for FY2020.

Revenue for 2HFY2021 was $1.43 billion, up 38.4% y-o-y; revenue for FY2021 was $2.63 billion, up 24.5% over FY2020.

According to CDL, the higher revenue was led partly by improving hotel operations, which returned to profitability in 2HFY2021.

Despite the pandemic, the company’s property development segment did well too.

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With a total of 2,185 residential units worth $4.3 billion sold, it was CDL’s highest annual property sales ever.

Projects that did well in FY2021 include Whistler Grand, Amber Park, The Tapestry and Irwell Hill Residences in Singapore, as well as overseas projects such as Shenzhen Longgang Tusincere Tech Park.

CDL plans to a final dividend of 8 cents per share, a special final dividend of one cent for FY2021, which, coming on top of the 3 cents interim dividend already paid, will bring its full year dividend to 12 cents which is the same what it paid for FY2020.

In addition, it plans to pay a distribution in specie of CDL Hospitality Trusts units valued at 19.1 cents per CDL share held, giving a total payout worth 31.1 cents.

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A total of 144.3 million CDLHT units will be distributed, which when completed, will trim its stake to 27% from around 38% it holds now.

CDL explains that this distribution is “yet another positive outcome”, reflecting its “commitment towards capital recycling to enhance efficiency and maximise shareholder value.”

Upon completion of the distribution, CDL will deconsolidate CDLHT from its accounts and thereby book gains on any future sale of assets from CDL to CDLHT should the transaction value exceed the carrying book value of the assets.

Some of the assets, presumably, will come from CDL’s subsidiary Millennium & Copthorne Hotels, which used to be separately listed by CDL privatise it.

Upon accounting deconsolidation of CDLHT, CDL will recognise an gain of around $467.5 million on a pro forma basis.

CDL’s net gearing (including fair value of investment properties) would be at 55% from 61%.

With gradual resumption of travel, CDL's hotel operations are poised for a "long-awaited imminent rebound," says executive chairman Kwek Leng Beng.

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"We will continue to review and optimise our hospitality portfolio through operational improvements, refurbishments, redevelopments and divestments to extract value.

"At the same time, to generate sustainable returns for shareholders, we will be agile and opportunistic to redeploy our capital to acquire assets in resilient sectors.

The proposed distribution of CDLHT demonstrates CDL's commitment and appreciation to shareholders, he says.

Group CEO Sherman Kwek says that CDL's capital recycling initiatives, as demonstrated by the divestment of Millennium Hilton Seoul and Tanglin Shopping Centre as well as the deconsolidation of CDLHT, will strengthen CDL's balance sheet and maximise shareholder value.

"The group is well-positioned to redeploy capital to higher growth assets and expand our diversified portfolio in our key markets," he adds.

As at Dec 31 2021, CDL’s net asset value per share was $9.28, slightly below $9.38 as at Dec 31 2020.

If the less conservative revalued net asset value is applied, it would be $15.70, versus FY2020’s $14.26.

CDL shares closed on Feb 24 at $7.01, down 3.08%.

Photo: Samuel Isaac Chua/The Edge Singapore

CDL reports 2HFY2021 earnings of $129.7 mil; plans distribution in specie of CDLHT units worth 19.1 cents

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