CDL: raises dividend policy to minimum 35% payout ratio based on PATMI

CDL: raises dividend policy to minimum 35% payout ratio based on PATMI

CDL Adjusts Dividend Policy with Minimum 35% Payout Ratio Based on PATMI

City Developments Limited (CDL) has signaled a shift in its dividend policy, with analysts noting a potential minimum 35% payout ratio based on profit after tax and minority interests (PATMI). This adjustment aligns with the company's ongoing efforts to unlock shareholder value through asset sales and debt management, as highlighted by JP Morgan analysts Mervin Song and Terence Khi in a recent report.

CDL's PATMI rose 3.9% year-to-date to $91.2 million as of June 2025, accompanied by a declared special dividend of 3 cents per share. The firm has divested $1.5 billion in non-core assets, including its 50.1% stake in South Beach, generating a $465 million gain. Analysts estimate that 25% of this gain—equivalent to 13 cents per share—could translate into a special dividend by the end of FY2025, surpassing consensus expectations of 15.5 cents per share.

JP Morgan notes that CDL's new target price of $8.20 reflects a 35% discount to its estimated NAV of $12.65 per share, down from a prior 40% discount. The firm anticipates further value unlocking through potential sales of UK assets, including a £110 million Shoreditch property and Quayside Isle @ Sentosa, which is listed for $111 million. Proceeds from these disposals may fund higher dividends rather than solely debt reduction, according to the analysts.

CDL's net gearing is projected to decline from 70% to the high 50s–low 60s over the medium term, though near-term leverage may remain stable due to recent executive condominium purchases. The company also retains a share buyback mandate, with management indicating undervalued pricing for potential repurchases.

With 57% of its debt on floating rates, CDL stands to benefit from anticipated interest rate cuts, which analysts estimate could boost core PATMI by 78% in FY2025 and 50% in FY2026. These factors position CDL as a potential beneficiary of Singapore's broader focus on value-driven investments.

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