OCBC Investment Research raised its target price for property developer City Developments Ltd to S$14.05 from S$13.96 and kept its ‘buy’ rating, citing higher average selling prices for its residential units.
By 0137 GMT, CityDev shares were up 1 percent at S$13, after rising 44.6 percent in 2012.
OCBC noted that CityDev sold units at its latest condominium launch, Echelon, at around S$1,700 per square foot on average, which was above expectations.
The brokerage estimates that the breakeven for Echelon is S$1,200 per square foot, which translates to an attractive gross profit margin of about 40 percent for the project.
“We continue to see CityDev as the best-in-class amongst domestic residential developers due to its strength in project execution, ability to read the market, and its effective risk-weighted approach to land banking,” said OCBC in a report.