CDL sold 1031 homes in H109, higher than UBS est of 1000 for FY09 Based on sales thus far and management’s plans, we increase CDL’s 2009 home sales to 2100 units from 1000 units. We expect sales momentum to continue at current levels for H209 as mortgage and deposit rates stay low, and pent up demand works it way through. For 2009, we expect total Singapore primary sales of 11,000-13,000 units, higher than the 11,147 in 2006. Resale prices in the prime and mass districts have recovered 25% and 8% YTD respectively, and we expect resale volumes to continue to gradually trend up.

Q209 profit of S$140m in line with our estimate of S$125m H209 EPS of 14.7c was 61% higher than 9.1c for Q109, primarily because of home sales at The Arte. CDL had commenced construction for The Arte in 2008 so units sold in Q209 were booked in the same quarter. Also, hotel operating profit improved by 54% QoQ as the group cut costs by GBP44.6m by reducing manpower costs, central costs and non-hotel expenses. H109 EPS of 23.8c was 43% of our FY09 forecast.

Hotel EBITDA lowered by 10%, higher home sales lift EPS in 2010-2012E We adjust our EPS estimates to account for lower consensus EBITDA estimates (- 10%) for the hotel segment and higher home sales in 09 (2100 units from 1000 units). EPS for 2009/10/11E are changed by -7%/2%/7%. City Developments remains our Key Call in the Singapore Property sector. Our price target of S$11/sh is based on 1.1x P/RNAV.