CDL H1 profit jumps three times to S$301 million on strong condo sales, doubles interim dividend

[SINGAPORE] Property developer City Developments Ltd (CDL) saw its first half net profit treble to S$301.6 million, buoyed by strong development revenue, ahead of a strategic review of its group businesses.

At its earnings briefing on Wednesday (Aug 13), CDL chief executive Sherman Kwek described the first half as a “good start” with revenue and profit recognition from its Singapore development projects coming through at a much faster pace. 

As a result, earnings per share shot up more than three times to S$0.333, from S$0.097 previously. 

An interim dividend of S$0.06 per share was declared for the half year, double the S$0.03 per share a year prior. It will be paid on Sep 4, after the record date on Aug 21.

CDL shares gained on the news, rising as much as 11 per cent in the morning before ending Thursday 4.3 per cent or S$0.34 higher at S$8.20. The shares still trade under their net asset value (NAV) per share of S$10.74 as at Jun 30.

Profits were driven partly by quicker construction progress at some projects, such as the recently completed Lumina Grand executive condominium in Bukit Batok, and strong sales at Newport Residences. The CBD project launched for sale in January and has since sold more than 80 per cent of units at a median price of S$3,078 per square foot. 

Other developments such as Norwood Grand in Woodlands and Union Square Residences, which had got off to a slower start, are now seeing steady sales, Kwek added. 

Revenue from property development consequently jumped 166.8 per cent to S$1.56 billion in H1 2026, from S$583.2 million previously.

In the pipeline are around 2,200 units across five new projects. These include the 570-unit Lucerne Grand along Lakeside Drive, which will hit the market in October, and two EC projects – Wynwood Grand in Woodlands and Solana Grand in Bukit Panjang – slated for launch in the first quarter of 2027. 

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Two recently acquired government sale (GLS) sites – at Tanjong Rhu Road and Peck Hay Road in Newton – could also come to market in Q2 and H2 2027, respectively. 

The two acquisitions, made at record prices, pushed net gearing to 75 per cent as at Jun 30, up four percentage points from end-2025.

CDL now has a “comfortable” level of supply, giving sufficient visibility over upcoming launches without overextending its land bank. 

“We don’t want to go back to a point in time, like in early 2018, when I had 4,000 units in the pipeline, and then suddenly, some cooling measure (came) out, and then our share price was really wrecked,” Kwek said. 

At the same time, pulling back too far on acquisitions is not an option. Doing so could lower gearing and conserve cash, but Kwek highlighted that an insufficient land bank would leave CDL with fewer projects contributing revenue and profit. 

The group therefore has an “optimal pipeline land bank” in mind, and will replenish its stock in a timely and disciplined manner. 

This means pursuing attractive GLS sites, including EC plots, though Kwek said bids for the latter will be calibrated to reflect new tighter rules for new projects.  

CDL may also consider en bloc opportunities where pricing is compelling. 

“En blocs are usually not our preferred method because it (entails) a much longer and cumbersome process,” said the chief executive. But “well-located legacy or aged assets” could still be attractive if the price is right. 

First-half performance

Overall, H1 revenue grew 61.1 per cent to S$2.72 billion, from S$1.69 billion the year before. 

The group’s hotels operation recovered from a pre-tax loss of S$84.4 million a year ago to post pre-tax profits of S$42 million, as revenue increased 6.4 per cent to S$781.3 million. Global revenue per available unit (RevPAR) rose 4.9 per cent to S$161.90. 

“Our hospitality portfolio showed steady momentum with RevPAR growth across all regions, supported by the strength and quality of our global hotel assets,” said executive chairman Kwek Leng Beng.

The uplift was also supported by contributions from the newly acquired Holiday Inn London - Kensington High Street, which has become the largest contributor to its UK hotel portfolio, said group chief financial officer Yiong Yim Ming. 

Meanwhile, earnings from CDL’s investment properties edged up 3.2 per cent to S$257.1 million.  Pre-tax profit for the segment fell 62.6 per cent to S$28.4 million due to “noticeably absent" capital recycling gains and contributions from divested assets. 

Sherman Kwek attributed the lack of divestments and capital recycling to geopolitical tensions and global uncertainty, which has dampened investor sentiment. “We have certainly pushed hard for H1… but I see that momentum is coming back now, so our divestments will probably be more weighted on the second half.” 

While there is “some urgency” to recycle capital, Kwek said CDL would not sell for the sake of it as it leaves “too much money on the table”. The group is looking to divest its UK development legacy portfolio, comprising five properties valued at about S$800 million as at end-2025. 

CDL has received offers for some of these sites, but will hold out if they do not meet its pricing expectations, Kwek said. “Some of them (also) have good potential, just that it will take too long for us to go and try to unlock or recognise the potential.”  A few “fairly significant” divestments are in “very advanced” stages, and might complete later in the year or early next year, he added. 

Asked whether dividends could fall if CDL books fewer capital recycling gains this year, Kwek said the absolute payout could fluctuate with earnings. But he emphasised that the group’s payout ratio remains unchanged at 35 per cent of profit after tax and minority interests. 

On whether CDL would become more asset-light like some of its peers, Kwek said the group would “never be a fully asset-light company” with asset ownership and property development remaining core to its DNA. 

But with CDL’s asset base now at around S$36 billion, part of the balance sheet would need to become more asset-light to avoid becoming “too top-heavy”. “As we are buying new stuff, we should be also divesting some of our either non-core, mature or underperforming assets,” he said.

Currently, assets under management for CDL’s fund management platform stood at about S$4 billion – a long way to go from the S$5 billion target it had hoped to hit by 2023. 

“We do have plans to substantially grow this, and obviously, we’re going to have to put a much stronger setup in place to ensure that we can get there,” he said. Further details will be set out as part of the group’s strategic review, which it intends to unveil at the end of September. 

The strategic review – the results of which were initially to be revealed in June – will include more specifics on CDL’s capital recycling plans, the focus of future investments and how it intends to lower gearing.

Kwek said the board unanimously approved the review on Tuesday, but management still needed to fine-tune parts of the plan.

CDL’s liquidity remained strong, with S$2 billion of cash and S$4.9 billion in credit facilities. 

Average debt maturity rose to 2.6 years, while average borrowing costs fell to 3.4 per cent. Yiong said CDL aims to keep borrowing costs no higher than 3.5 per cent by year-end.