Refinancing risks removed, but concerns remain over two foreign partners. The refinancing of another substantial loan (after Suntec REIT: S$825m, CDLHT: S$350m and CCT: S$160m) further indicates that credit markets have eased, which is good news for the real estate sector. While we view the refinancing exercise and introduction of a new established foreign investor positively for CDL, concerns remain over the possible exit of Istithmar and El-Ad. Earlier this year, Istithmar was reported to be looking at offloading assets to generate cash for its parent – Dubai World to help pay its debts. During 2H08, El-Ad had also deferred the construction of Plaza casino-Hotel in Las Vegas and deferred payment of an S$625m loan used to buy its land. To date, both companies have yet to provide clear indication of their financial status and priority of projects under their portfolio.
Minimal impact, reiterate BUY on CDL. Net gearing of CDL would only inch up to 0.49x (currently 0.47x) upon subscription of the S$195m convertible notes, which is still healthy in our view. CDL’s 33% stake equates to S$0.15 per share (assuming project completes by end-2016), accounting for only 1.5% of our S$10.28 base case RNAV. We continue to favour developers with sizeable Singapore residential exposure. Reiterate BUY on CDL at S$12.34, pegged at 20% premium to base case RNAV.
Sponsored Links
No comments:
Post a Comment