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SUBSTANTIAL ANNUAL PROFIT DROP IS WARNED BY CDL

SUBSTANTIAL ANNUAL PROFIT DROP IS WARNED BY CDL

City Developments Ltd. (CDL), a major player in the Singaporean real estate market, has alerted investors to a “substantial” yearly decline in its earnings for the full year 2023 due to growing borrowing costs and a slowdown in asset divestments.

In a statement released late on Thursday, CDL said it anticipated a decline in attributable net profit for 2022 from the record S$1.29 billion ($980 million) earned the previous year.

Large divestitures, such the KRW 1.1 trillion ($1.25 billion) sale of the Millennium Hilton Seoul in Korea, which was finalized in February of last year, contributed to the company’s improved 2022 performance. The sole significant asset transaction that CDL has made this year was the $340 million sale of a prime Tokyo real estate property, which was finalized in the third quarter.

CDL reassured the market that its core business remained steady despite this year’s decline in profits.

According to CDL’s statement, “the outlook for the global economy remains extremely vulnerable to macroeconomic sensitivities, such as ongoing inflation, a high-interest rate environment, and geopolitical tensions.” “Yet, the group anticipates continuing to be profitable for FY 2023. The group’s overall business performance and core operating earnings have not been significantly impacted compared to the previous financial year.”

H1 Lower Line Declines 94%

The SGX-listed group’s shares experienced a 0.16 percent decline to S$6.42 apiece on Friday following the profit warning, which was given ahead of the company’s anticipated presentation of its full-year financials in February. The previous day’s closing price of S$6.43 had been reached.

According to CDL’s first-half financial figures, the company’s attributable net profit fell 94 percent to S$66.6 million in the first half of this year from S$1.1 billion in the same period last year.

The only benefit from divesting that CDL achieved in the first half of this year was S$15.6 million from the sale of strata apartments as part of the Tanglin Shopping Center’s collective sale. This amount paled in comparison to the S$1.4 billion in asset sale revenues that CDL recorded at the same time last year.

The single disposal for CDL in the third quarter was the sale of the Tokyo luxury home site to Japanese condo developer Daikyo.

Apart from the Hilton Millennium Seoul, which it sold for S$27 million in 2022, CDL also made S$399 million last year by selling a Singaporean warehouse and reducing its ownership of SGX-listed CDL Hospitality Trusts.

The S$34 million in provisions for impairment losses on the company’s two UK investment properties also hurt CDL’s bottom line this year. The company restated that it still evaluates properties that are up for impairment review.

Higher interest rates have also hurt the developer; in the first half of 2022, CDL’s average borrowing cost nearly doubled to 4.1 percent from 2.4 percent for the entire year.

Over the January to September period, CDL’s sales in its primary property development business decreased to S$1.4 billion in value, a 26 percent decrease from the S$1.9 billion it booked over the same nine-month period the previous year.

A downturn in Singapore’s private housing market like Tembusu Grand Condo, where developer sales of new private homes fell 10% in the first 11 months of 2023 compared to the same time the previous year, was partially blamed by the company for its sales decline.

Normanton Park Showflat is open for online bookings. You can now register online to receive direct developer discount offers and prices. Also, visit Tembusu Grand showflat and check the latest Tembusu Grand Floor Plan.


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