Singapore’s City Developments Reports Loss, Mulls China Comeback
(Bloomberg) -- City Developments Ltd, run by Singapore’s richest property dynasty, reported a first-half loss on the fallout from the pandemic and said it is mulling a deeper China presence after being stung by write downs on an earlier investment.
Travel restrictions caused revenues to decline at the firm’s hotel operations and investment properties, while the withdrawal of Covid tax relief plans contributed to a S$32.1 million ($23.7 million) loss in the first six months. Touching on the developer’s plans for China, chief executive officer Sherman Kwek said the world’s most populous nation is still a “very viable” market.
“You can’t argue with the statistics. You can’t argue with the strong demand and consumption in China,” Kwek said in a briefing with reporters and analysts on Thursday. “This is certainly an economy that we still need to pay close attention to and need to deepen our presence.”
The upbeat outlook for China underscores how difficult it is for Asia’s property developers to ignore the world’s second-largest economy. The company is still reeling from a record loss of S$1.9 billion for the last financial year, largely because of impairments from its bungled backing of Chinese developer Chongqing Sincere Yuanchuang Industrial Co.
China has caused jitters among investors following a regulatory crackdown on some of the nation’s biggest tech companies, while its “Three Red Lines” requirement for property developers has tightened borrowing limits and made it harder for indebted companies to refinance.
CDL has already written off the investment and said it will no longer inject funds into Sincere, which is trying to stave off a bankruptcy application brought against it by a China-based creditor. A court ruling on the case may come as early as next week, Kwek said.
Still, the Singapore developer is seeking to move past the fallout and focus on other projects. The company applied for a Singapore initial public offering for a U.K real estate investment trust. It’s reviewing potential divestments and looking to tap Singapore’s booming residential market.
With travel restrictions still largely in place for most countries, CDL’s hotel operations segment registered a 10.8% decline in revenue in the first six months.
The firm’s investment properties also generated lower rental income, hurt by decreased footfalls, rental rebates given to retail tenants and significantly lower contribution from its Phuket mall.
Overall, CDL’s revenue in the six months rose by 11.1% to S$1.2 billion, boosted by its property development business, which saw an increase of 35.5% compared with the same period last year.
“While the road to recovery remains uneven, the accelerated vaccine deployment across the globe and the gradual easing of border restrictions offer light at the end of the tunnel,” Kwek said in a statement.
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