City Developments (CDL)’ lowly-geared balance sheet presents it with the ability to capitalise on acquisition opportunities, said RHB. According to the research house, CDL’s net gearing would improve to 19% (2015: 26%) post divestments, giving a healthy debt headroom of >SGD3bn (assuming comfortable gearing of 50%). As such, it expects expects sizeable acquisitions in the near-term, capitalising on market weakness. CDL successfully monetised its Nouvel 18 development in Oct, selling its 100% stake to high net worth Singaporean investors for SGD978m (SGD2,750 psft), booking net gain of SGD27m. RHB comments that the move was positive as it not only de-risked CDL’s balance sheet from carrying sluggish high-end inventory, but also helped avoid ~SGD229m in qualifying certificate (QC) charges. The research house believes that moving forward, CDL can do similar profit participation securities (PPS) structures for its remaining high-end units, and in the longer term potentially monetise South Beach project, which has a GDV north of SGD3bn.... Continue Reading