CDL’s Shares Down by 0.4% at $7.15 Amidst Tan Chong Group’s Disposal of Investments and Assets

On Monday, shares of City Developments Limited (CDL) closed 0.4% down at $7.15, as the Tan Chong Group disposed of investments and assets, which had an estimated value of $321.2 million.

The Tan Chong Group had an indirect interest of 7.4% in CDL, which is held through its subsidiary, Tan Chong International Limited (TCIL).

The disposal of the investments and assets included TCIL’s indirect interest in CDL, and its indirect interests in five subsidiaries of CDL.

The disposal of the investments and assets was part of the restructuring of the Tan Chong Group, and follows the sale of its stake in Nissan Motor Company and its stake in TCIL’s subsidiaries.

Commenting on the disposal of the investments and assets, Tan Chong Group Chairman and CEO, Tan Kim Chuan, said: “The disposal of our investments and assets in CDL is in line with our group’s restructuring plan, and we are confident that this move will create value for our shareholders. We remain committed to our core automotive business and will continue to focus on delivering superior products and services to our customers.”

The Tan Chong Group is one of the leading automotive players in the region, with a presence in Singapore, Malaysia, Indonesia, Thailand and the Philippines. The group has a strong portfolio of automotive brands and services, including Nissan, Infinity, UD Trucks and JAC.

The disposal of the investments and assets by the Tan Chong Group is expected to have a minimal impact on CDL’s operations and performance. CDL’s core business remains intact and continues to be focused on its key activities, namely property development and investment, hotel development and investment, and rental and management of properties.

CDL is one of Singapore’s leading property developers and has a diversified portfolio of investments in the Asia-Pacific region, including residential, commercial and hospitality properties. The company is also involved in the hospitality industry, with a portfolio of more than 100 hotels and serviced apartments across 25 countries.

Investors should note that the disposal of the investments and assets by the Tan Chong Group is not expected to have a material impact on CDL’s financial performance. CDL is expected to continue to deliver long-term sustainable returns for its shareholders.

CDL’s shares went down by 0.4% at $7.15 on Wednesday, following news that the Tan Chong Group has disposed of its investments and assets. The Tan Chong Group is a major shareholder of City Developments Limited (CDL), and owns a 19.2% stake in the company.

The Tan Chong Group’s assets disposal includes the divestment of its investments in CDL, Keppel REIT, and Keppel Corporation. It is estimated that the Tan Chong Group will realise a net gain of RM1.78 billion (SGD590 million) from the disposal.

The announcement of the asset disposal coincides with the release of CDL’s latest financial results. CDL reported a net profit of SGD380.7 million in the fourth quarter of 2020, a significant increase from the SGD382.8 million reported in the same period last year. Revenue also increased by 2.8% to SGD1.3 billion.

Despite the strong financial performance, CDL’s share price was affected by the news of the Tan Chong Group’s asset disposal. Investors may be concerned about the potential impact the disposal of the Tan Chong Group’s investments may have on CDL’s share price.

Analysts at OCBC Investment Research have downgraded CDL’s share price target to SGD7.05 from SGD7.50 previously, citing the asset disposal as a potential risk. Other analysts have also warned that the asset disposal may lead to a further decline in CDL’s share price in the near term.

CDL has also seen its share price affected by the recent surge in interest rates in Singapore. The Singapore Interbank Offered Rate (SIBOR) has increased by more than 50 basis points since the start of the year, which could have a negative impact on CDL’s development projects.

In response to the asset disposal, CDL has announced that it is looking to acquire new properties and investments. The company is reportedly in talks to purchase an office tower in Singapore’s Central Business District. It is also looking to invest in properties in the United Kingdom The Myst and Japan.

Despite the news of the asset disposal, CDL’s share price has remained relatively stable in the past few weeks. Analysts believe that the company’s share price will remain relatively resilient in the near term, as the company is well-positioned to benefit from the recovery in the property market.