CityDev Q1 profit halved, upbeat on outlook

SINGAPORE (Reuters) - City Developments (CTDM.SI), Southeast Asia's second-largest developer, posted a 50 percent drop in first-quarter net profit, but said economic conditions have improved and it expects to make a profit this year.

The Singapore-based firm posted a S$83.1 million ($57 million) net profit for January-March, down from S$165 million a year ago, mainly due to lower contributions from property development and hotels.

CityDev said home sales in Singapore started recovering in February, but office rents were weakening and the occupancy for its office properties fell to 91 percent during the quarter from 94 percent at the end of 2008.

"The global economic scenario is better than six months ago," CityDev said in its earnings statement. "The worst may be over and a gradual economic recovery is emerging."

Several analysts are, however, calling a "sell" on CityDev, saying a 50 percent rally in its share price in the past month as global equities recovered was unsustainable.

"Valuations now appear rich, trading at 1.4 times book value against (the property) sector's 0.8 times," Singapore stockbroker DMG & Partners said in a report on Monday before the results.

OCBC Investment Research said CityDev was vulnerable to a drop in business travel and to any potential scaling up of the swine flu outbreak, which could hurt contributions from UK-based hotel arm Millennium & Copthorne (M&C) (MLC.L).

M&C, 53 percent-owned by CityDev, last week reported a 51 percent fall in January-March net profit to 6.9 million pounds.

(Reporting by Kevin Lim, Editing by Ian Geoghegan)