HOLD S$10.01 STI : 2,749.24
Price Target : 12-month S$ 11.24
Top bid of S$396m for Alexandra Rd site. City Developments (CDL), Hong Leong Group and Hong Realty beat six other bidders with a top bid of S$396m or S$754 psf ppr for a plum site located along Alexandra Rd. The 107,129 sf site has a total GFA of 524,934 sf and can potentially house c.545 units. The winning bid is 9% higher than the second (Tanglin Land, S$692 psf ppr) and 25% higher than the lowest bid (IOI Properties, S$606 psf ppr). Other participants included Keppel Land (S$647 psf ppr) and a consortium involving F&N (S$646 psf ppr). The keen interest seen is largely due to its city fringe location and proximity to Redhill MRT station.
Bid is fair, estimated selling price of the end product in line with recent transactions. We expect breakeven cost to be around S$1150-1250 psf and the project should generate a 15% profit margin if sold at S$1400 - $1500 psf. Recent transacted prices for the adjacent Ascentia Sky project developed by Wing Tai range between S$1380 and S$1573 psf. We estimate this project could potentially add 2-3 Scents to CDL's RNAV.
Maintain Hold and S$11.24 TP for CDL.
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