City Developments C09

Shares buyback. Is it time to invest or stay sideline?


Introudction

City Developments Limited (CDL) is a leading global real estate operating company with a network spanning 100 locations in 28 countries and regions. Its income-stable and geographically-diverse portfolio comprise residences, offices, hotels, serviced apartments, integrated developments and shopping malls.

What is Shares buyback

Shares buyback usually occur when the company feels that the current price is undervalued. The buyback can be from the open market or its shareholders directly. It also helps to increase EPS from Financial Statement.

How much CDL bought

City Developments Limited have been buying back their shares since 16 August 2018 and end at 18 October 2018. Total shares purchased is 2,400,000 and average value $8.94. The breakdown can be seen as below.

Date of Buyback

Unit of Shares

Cost

Average Price

Total

2,400,000

$21,445,467.05

$8.94

16 August 2018300,000$2,852,198.31$9.51
17 August 2018 200,000 $1,929,731.93$9.65
23 August 2018 100,000$943,442.64$9.43
24 August 2018 100,000$929,218.25$9.29
29 August 2018 100,000$951,007.41$9.51
30 August 2018 100,000 $933,153.48$9.33
31 August 2018 100,000$928,145.73$9.28
3 September 2018 100,000$907,283.73$9.07
14 September 2018 200,000$1,755,181.99$8.78
17 September 2018 100,000$881,771.81$8.82
18 September 2018100,000$874,738.29$8.75
19 September 2018 100,000$892,125.12$8.92
21 September 2018 100,000$891,957.73$8.92
11 October 2018 200,000 $1,637,305.17$8.19
12 October 2018 100,000$819,905.52$8.20
15 October 2018 100,000$823,103.04$8.23
16 October 2018 100,000$831,232.13$8.31
17 October 2018 100,000$842,826.35$8.43
18 October 2018 100,000$821,138.42 $8.21

What is good about CDL

  • Low Gearing ratio of 23% before fair value adjustments.
  • 17% after fair value adjustments.
  • Investment Properties held at cost, implied Price to Book Value of roughly 0.526 if fair value is used.
  • Share buyback since August 2018 at price of 8.94.

Source: S&P Capital

What is not so good about CDL

  • Inventory of unsold properties in SG one of the highest among the various companies.
  • M&C Hotels PLC seems to have struggled this year.

Points to take into consideration

  • Proxy for any Singapore Property Policy reactions.
  • Bulk of profits still comes from Property development in Singapore.
  • There seem to be no new sales of New Futura from Oct to December, which could imply that vacancy rates remain same at 19% and imply poor sales of current ongoing projects.

Conclusion

At 52 weeks low price $7.84 and strong support holding, it definitely is undervalued stocks and low P/B ratios. There is also strong buy back from company which make it even more attractive to vest at current price.

Disclaimer

All information and recommendations are base on personal views. Please take it with a pinch of salt. Understand the business and manage your risk.

Author: The Financial Guy

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