City Developments (C09) H1 2024 earnings summary

Executive summary

• Revenue for H1 2024 declined 42.2% year-over-year to S$1.56 billion due to the absence of a major EC project revenue boost seen in H1 2023 and construction delays impacting profit recognition.

• PATMI rose 32% year-over-year to S$87.8 million, driven by divestment gains and capital recycling, despite lower property development profits.

• EBITDA remained stable at S$456 million, with strong cash generation from hotel and investment properties.

• The group remains focused on capital recycling, selective investments, and prudent capital allocation, with a cautious approach to new acquisitions.

• Dividend for H1 2024 was reduced to S$0.02 per share, with a commitment to maintain a 33% payout ratio and potential for a higher year-end dividend depending on divestment gains.

Financial highlights

• Revenue: S$1.56 billion (down 42.2% year-over-year); EBITDA: S$456 million (down 1% year-over-year); PBT: S$155.4 million (down 13.4% year-over-year); PATMI: S$87.8 million (up 32% year-over-year).

• Gross margin improved to 44% from 29% in 1H 2023.

• NAV per share: S$10.12; RNAV per share: S$17.17.

• Special interim dividend: 2.0 cents per share (1H 2023: 4.0 cents).

• Share price at S$5.16 as of 28 Jun 2024, down 22.4% YTD.

Outlook and guidance

• Management expects profit recognition to improve in coming quarters as delayed projects complete and anticipates sales pickup in 2H 2024 with more launches and potential interest rate cuts.

• Hotel segment outlook remains positive, especially in Paris, with strong RevPAR during the Olympics and continued resilience in key markets.

• Focus remains on capital recycling, asset enhancements, and fund management growth.

• Two new residential projects planned for launch in 2H 2024: Union Square Residences and Norwood Grand.

• Investment pace has slowed, with selective deployment and a focus on reducing gearing to the high 50s by end-2025.