City Developments Limited: Strong 1H26 Results with Strategic Review Catalyst September 11, 2026

Brief Overview

City Developments Limited (CDL) reported robust 1H26 results, with revenue and PATMI growing 61% and 231% year-on-year respectively, ahead of expectations and forming 67% and 70% of Phillip Securities Research’s FY26e forecasts. Growth was driven by the property development segment, where revenue and pre-tax profit surged 166% and 122% respectively on the full recognition of the fully sold Lumina Grand EC, alongside contributions from well-sold projects. Hotel operations turned around from a pre-tax loss of S$84.4 million in 1H25 to a pre-tax profit of S$42 million. The 1H26 interim dividend doubled year-on-year to 6 cents per share.

Investment Positives

Property development delivered strong growth, with a robust launch pipeline ahead. In 1H26, the Group and its joint-venture associates sold 352 units worth S$892 million, anchored by the launch of the ultra-luxury Newport Residences on Anson Road, which is 83% sold to date. Other projects, including The Orie, The Myst, Zyon Grand, and Norwood Grand, also sold well, with more than 90% sold to date. CDL acquired two prime Government Land Sales (GLS) sites at Tanjong Rhu Road and Peck Hay Road in 1H26, bringing its launch pipeline to around 2,200 units across five projects.

Hotel operations recovered significantly, supported by a 4.9% year-on-year increase in global RevPAR, contributions from the acquisition of Holiday Inn London – Kensington High Street, and net exchange gains of S$38 million in 1H26 versus a S$63 million loss in 1H25.

The strategic review, expected by end-September, should provide greater clarity on future strategic direction, capital allocation, and implementation. Re-rating potential exists from an accelerated pace of asset recycling and deleveraging, as well as expanding its fund management business to grow recurring income.

Investment Negatives

Net gearing increased from 71% in FY25 to 75%, mainly due to payments for the Tanjong Rhu and Peck Hay Road GLS sites. The strategic review should provide greater clarity on the roadmap to reduce net gearing towards the medium-term target of 60%, with further divestments likely. The cost of borrowing declined from 3.7% in FY25 to 3.4% in 1H26.

Outlook

Management indicated the strategic review is substantially complete, with only final refinements remaining. Potential divestment targets include underperforming legacy UK development sites and commercial properties in China, where market conditions remain challenging. Singapore remains a key source of resilience, with office and retail occupancy at 96.9% and 97.7% respectively. Residential sales momentum should remain strong, supported by the upcoming October 2026 launch of Lucerne Grand, located next to Lakeside MRT station, well positioned to benefit from the future development of the Jurong Lake District.

Recommendation & Target Price

Phillip Securities Research maintains a BUY recommendation with an unchanged RNAV target price of S$11.32, representing a 25% discount to their RNAV of S$15.09. FY26e forecasts are unchanged despite the strong 1H26 earnings beat, as 1H26 benefited from the full recognition of Lumina Grand.

Frequently Asked Questions

Q: What drove CDL's strong 1H26 results?

A: Growth was driven by the property development segment, where revenue and pre-tax profit surged 166% and 122% respectively, primarily due to the full recognition of the fully sold Lumina Grand EC, alongside contributions from well-sold projects including Newport Residences and Norwood Grand.

Q: How did the hotel operations perform in 1H26?

A: Hotel operations turned around from a pre-tax loss of S$84.4 million in 1H25 to a pre-tax profit of S$42 million, supported by higher revenue (+6.4% YoY), a 4.9% YoY increase in global RevPAR, contributions from the Holiday Inn London – Kensington High Street acquisition, and net exchange gains of S$38 million versus a S$63 million loss in 1H25.

Q: What is the current status of CDL's residential sales?

A: In 1H26, the Group and its JV associates sold 352 units worth S$892 million. Newport Residences is 83% sold, while The Orie, The Myst, Zyon Grand, and Norwood Grand are more than 90% sold.

Q: What is CDL's upcoming launch pipeline?

A: CDL's launch pipeline comprises around 2,200 units across five projects, following the acquisition of GLS sites at Tanjong Rhu Road and Peck Hay Road. The next launch is Lucerne Grand in October 2026, located next to Lakeside MRT station.

Q: Why did net gearing increase?

A: Net gearing rose from 71% in FY25 to 75% in 1H26, mainly due to payments for the Tanjong Rhu and Peck Hay Road GLS sites. The cost of borrowing, however, declined from 3.7% to 3.4%.

Q: What is the strategic review expected to deliver?

A: The strategic review, expected by end-September, should outline a clear implementation roadmap for capital allocation and portfolio optimisation, with potential divestments of underperforming legacy UK development sites and commercial properties in China.

Q: What is the analyst's recommendation and target price?

A: Phillip Securities Research maintains a BUY recommendation with an unchanged RNAV target price of S$11.32, representing a 25% discount to the RNAV of S$15.09.

Q: What is CDL's dividend policy?

A: The 1H26 interim dividend doubled year-on-year to 6 cents per share.

This article has been auto-generated using PhillipGPT. It is based on a report by a Phillip Securities Research analyst.

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About the author

Darren Chan

Darren has over seven years of experience across both the buy-side and sell-side. During his tenure as a fund manager, he managed multiple funds and mandates, including dividend income, growth, customised, Singapore-focused, and regionally focused strategies. He holds a First-Class Honours degree in Banking and Finance from the University of London.

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