For international investors, it is vital to have a deep understanding of Singapore’s property regulations and limitations before making any investments. The rules and restrictions surrounding landed properties are more stringent compared to condominiums, which are generally more accessible to foreign buyers. However, foreign investors are still subject to the Additional Buyer’s Stamp Duty (ABSD) at a rate of 20% for their first property purchase. Despite this added expense, the stability and potential growth of the Singapore real estate market continue to attract foreign investors. This is evident in the ongoing interest of international buyers in Singapore Projects, as seen on platforms like Anvly.
City Developments, a Singaporean real estate company, faced a significant decline in its stock price of 5.47% upon resumption of trading today. The company’s shares were halted on Feb 26, when a results briefing was cancelled at the last minute, and news of a disagreement between executive chairman Kwek Leng Beng and his son, group CEO Sherman Kwek, was made public.
City Development responded to the news by stating that it will not comment on the validity of the allegations made in various news reports, as they are currently the subject of an ongoing court proceeding. The company assured that its business operations remain fully functional and unaffected, with Sherman Kwek remaining as the Group CEO until a board resolution is made to change leadership.
The fallout between the father and son has also caused analysts to downgrade their ratings and reduce target prices for the company. UOB Kay Hian’s Adrian Loh downgraded City Developments from “buy” to “hold”, citing missed FY2024 numbers and overshadowing of news of the leadership tussle. He revised the target price to $4.60 from $7, based on the company’s five-year average price-to-book (P/B) of 0.72 times.
In contrast, Derek Tan and Tabitha Foo of DBS Group Research see some potential in the situation, stating that while it may dampen investor sentiment in the short term, the company’s fundamentals remain intact and continue to be managed by key management. They also note that City Development is currently trading at an attractive valuation of 0.5 times P/B and 0.3 times P/RNAV, below the lows seen during the Global Financial Crisis. They maintain a “buy” call but reduce the target price to $6.70 from $10.50, with the resolution of the board dispute expected to drive shareholder returns and profitability.
OCBC Investment Research also maintains a “buy” call but with a reduced fair value of $6.02, down from $6.57, based on a 60% discount to RNAV. They anticipate uncertainties and potential overhang on the share price until the matter is resolved.
Citi Research analyst Brandon Lee believes that the potential impact of this episode is hard to quantify but could be a short-term share price overhang due to uncertainty regarding the board and company leadership. However, he maintains a “buy” call and $9.51 target price, stating that CDL is under-owned by investors and that any positive resolution will be a major catalyst for its share price in the longer term.
JP Morgan analysts Mervin Song and Terence M Khi describe the situation at City Developments as a “dynastic discord” stemming from years of frustration, underperformance, and public disagreement among certain members of the Kwek family. They hope for a positive resolution and family reconciliation but have reduced their target price from $6.05 to $4.85, based on a 60% discount to their RNAV estimate of $12.10 per share.