Economic Boom Lifts CDL Profits

Source : TODAY, Thursday, November 15, 2007

City Developments (CDL) said third-quarter profit rose 32 per cent as economic growth allowed the company to sell more homes and raise rents at its offices, shopping malls and hotels.

Net income advanced to $169.5 million in the three months ended Sept 30, from $128.3 million in the year-earlier period, the company said.

Sales rose 20 per cent to $796.2 million from $665.2 million.

Billionaire Kwek Leng Beng’s CDL is among the developers benefiting as Singapore’s longest economic expansion since 1991 fuels demand for homes and office space.

Home prices rose 8 per cent in the third quarter to their highest in 10 years. Demand for office space is spurring commercial rents.

CDL is most exposed to the Singapore residential market, said Ms Daphne Roth, vice-president of equity research at ABN Amro Private Banking. “The buoyant housing market here is driving City Developments earnings.”

CDL shares were unchanged at $14.20 at the close of trade yesterday. The shares have gained 12 per cent this year, compared with an 18 per cent advance for the benchmark Straits Times Index.

Revenue from residential development jumped 54 per cent to $235.2 million in the three months ended Sept 30, CDL said. It sold 3,450 units during the quarter from projects including City Square Residences, Tribeca and Sail@Marina Bay.

The company also said it expects fewer collective sales of existing buildings for redevelopment into new homes after the Government imposed stricter rules in September for those transactions.

The changes “will lessen the supply coming onto the market in the medium to long term, which should be healthier”, the company said.

CDL is also benefiting from a pick-up in the global travel industry. The company controls about 53 per cent of Millennium and Copthorne Hotels.

Hotel revenue climbed 7.8 per cent to $492.3 million, while sales from rental properties increased 19 per cent to $51.9 million.