CDL posts record PATMI of $1.13 bil for 1HFY2022 mainly from divestment gains and gain on deconsolidation of CDLHT

By Felicia Tan

/ The Edge Singapore |

August 11, 2022 3:10 PM SGT

SINGAPORE (EDGEPROP) - City Developments Limited (CDL) has posted record earnings with net profit after tax and non-controlling interest (PATMI) of $1.13 billion for the 1HFY2022 ended June.

The half-year period’s earnings is a reversal from the $32.1 million loss seen in the 1HFY2021. It is also the highest PATMI achieved since CDL’s inception in 1963.

The record PATMI was largely due to the divestment gains from CDL’s sale of Millennium Hilton Seoul and its adjoining land site for 1.1 trillion won ($1.25 billion), as well as the gain on deconsolidation of CDL Hospitality Trusts (CDLHT) from the group resulting from the distribution in specie.

The sale of the Millennium Hilton Seoul and its adjoining land site was completed in February. The deconsolidation of CDLHT was done in May.

During the 1HFY2022, the group’s revenue increased by 23.5% y-o-y to $1.47 billion thanks to the contributions from the property development segment, as well as the higher contributions from its hotel operations segment.

The recovery of the hospitality sector, which was driven by border reopenings and the relaxation of travel measures, saw CDL’s revenue per average room (RevPAR) surge by 110.4% to $113.60. CDL’s average gross operating margin (GOP) increased by 12 percentage points y-o-y to 24.7% in the 1HFY2022.

In the half-year period, CDL’s property development segment contributed 41% to the total revenue, backed by well-sold projects in Singapore such as Amber Park and Irwell Hill Residences as well as overseas projects such as Shenzhen Longgang Tusincere Tech Park and New Zealand land sales. The amount does not include revenue from joint venture (JV) projects such as Boulevard 88 and CanningHill Piers which are equity accounted for.

Profit before tax for the 1HFY2022 stood at $1.58 billion, up 163.4 times from the $9.7 million in the 1HFY2021 due to the divestment gains from the Millennium Hilton Seoul and its land site. The group recognised a pre-tax gain of $911.5 million and a total gain on disposal of $526.2 million, net of taxes and related transaction costs.

The group also recognised a total gain of $492.4 million, which includes negative goodwill, from the accounting deconsolidation of CDLHT from the group as a subsidiary. The group will recognise its interest in CDLHT as an associate.

The group’s three core segments, property development, investment properties and hotel operations, also saw improvements y-o-y on a like-for-like basis.

CDL’s earnings per share (EPS) for the 1HFY2022 stood at 118.3 cents on a fully diluted basis. Its net asset value (NAV) per share stood at $10.18.

As at June 30, cash and cash equivalents stood at $2.05 billion.

On this, CDL has declared a special interim dividend of 12.0 cents per share for the 1HFY2022, payable on Sept 9.

“Notwithstanding the macroeconomic volatility, the group remains cautiously optimistic that the economy will recover with strength. The group’s record profit performance in 1HFY2022 has provided substantial cash flow generation from timely asset divestments,” says CDL’s executive chairman Kwek Leng Beng.

On the rebound in CDL’s hotel operations segment, Kwek says he expects the group’s hospitality segment to be a “star performer” for the rest of the year.

“As Covid-19 concerns wane, our hospitality portfolio will be a valuable growth engine contributing meaningfully to the group’s recurring earnings,” he adds.

He continues: “Property investment, when viewed with a medium to long-term perspective for value appreciation, is a well-established hedge against inflation. In addition to building a solid development pipeline, the group will keep its focus on strengthening our recurring income streams.”

Sherman Kwek, group CEO of CDL says, “Our expansion into the living sector over the past few years has started to bear fruit as we gradually build up scale and diversification. We now have apartment rental sites across the UK, Japan, Australia and the US, and have recently completed our first purpose-built student accommodation deal located in the UK. Throughout the pandemic, these recurring income assets have shown strong resilience and the outlook for them continues to remain bright.

“Armed with a robust balance sheet and geographically diverse portfolio, the group’s strong underlying fundamentals will enable us to manage near-term volatility with tenacity and discipline. At the appropriate time, we can extract value from our portfolio through redevelopment, repositioning and divestment initiatives,” he adds. “Despite the current headwinds, we remain geared for growth but will be highly selective in our acquisition plans. The group will continuously refine its Growth, Enhancement and Transformation (GET) strategy to accelerate our growth and future-proof our business.”

Shares in CDL closed 5 cents higher or 0.61% up at $8.25 on Aug 10.

Check out the latest listings near Amber Park, Irwell Hill Residences, Boulevard 88, CanningHill Piers

This article first appeared on The Edge Singapore.

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