CDL is scheduled to announce its FY08 results on 26 Feb. We are expecting a net profit of $620.9m (or a 14.4% yoy decline), versus a consensus mean of $672.2m. We are expecting earning declines mainly from the property development and hotel operations.

As of 3Q08, CDL has not recognized profits from the Livia, which is 47%-sold. Depending on the progress of contruction, it could contribute to earnings in 4Q08. CDL will continue to book in profits from projects like One Shenton, Cliveden at Grange and Tribeca, but The Sail @ Marina Bay had obtained its TOP in 3Q08.

According to the World Tourism Organisation (UNWTO), tourism declined by 3% in both Europe and Asia for the second half of 2008. It expects 2009 international tourism to be in the range of 0% - 2% decline, with the Americas and Europe being the most affected regions. M&C, which contributes nearly 30% of CDL’s PBT, will be negatively impacted.

CDL recently announced the issuance of a $100m-tranche of Islamic Trust Certificates due in 2010, with a coupon of 3.25% per annum, payable semi-annually. This is the first issue under the S$1bn-programme under the Shariah financing principle of Ijariah. In addition, CDL also announced a new $1.5bn MTN Programme that replaces a $700m one established in 1999. The proceeds are meant for refinancing existing borrowings and general working capital requirements.

We still like CDL for its strong balance sheet and flexible landbank, which it could take full advantage of when the market recovers. We think that the likelihood of write-downs is minimal, but we have further lowered our ASP assumptions for its high-end projects. Reiterating our BUY recommendation, with a target price of $8.22 based on a 15%-discount to RNAV.