SINGAPORE, March 1 (Reuters) - OCBC Investment Research downgraded City Developments Ltd (CDL) to “sell” from “hold” and raised its price target to S$8.92 from S$8.38.
City Developments which is Southeast Asia’s second-largest property developer, posted a 32 percent year-on-year fall in fourth-quarter net profit on Wednesday, hurt by lower rental income.
By 0249 GMT, CDL shares were up 0.45 percent at S$11.18. The company’s share price has risen 25 percent since the start of the year.
OCBC said CDL’s net profits of S$799 million ($640.76 million) for the year to December were in line with its expectations and said the developer’s hotel segment put up healthy numbers due to higher average room rates.
“We expect numbers from hotels to stay relatively firm, particularly in London where hospitality assets are likely to outperform with the upcoming Olympic Games,” the brokerage said.
Owing to the share price appreciation since the start of the year, OCBC believes the current “risk-reward proposition appears unfavourable”.
“Our fundamental view remains unchanged that uncertainties in the domestic residential sector persist, which could bear on CDL given its significant landbank of 5.56 million square feet,” OCBC said. ($1 = 1.2470 Singapore dollars) (Reporting by Mark Tay; Editing by Michael Watson)