During a results briefing on Feb 25, City Developments (CDL) chairman Kwek Leng Beng appeared to look inwards when at least two questions on how its management intended to narrow the valuation gap between CDL’s trading price and its net asset value (NAV) and revalued NAV (RNAV), popped up.
“The key is we must find the right strategy for growth. Once you have that strategy, then your share price cannot fluctuate betwen $7.10 and $6.80,” says Kwek. According to CDL’s financials for FY2021 (the company has a December year-end), as at Dec 31, 2021, NAV stood at $9.28, down 1.1% y-o-y.
The company’s policy is to state investment properties at cost less accumulated depreciation and impairment losses. If fair value gains on investment properties had been factored in and the group’s hotels continue to be stated at cost, RNAV would be at $15.70, up 10.1% y-o-y.