ANALYSTS SEE “OVERHANG” ON SHARE PRICE
Amid the public spat within the company’s leadership, at least one brokerage house has downgraded its call on CDL shares, while two others reduced their target prices.
Analysts see the ongoing family feud, which became public and escalated into a legal battle this week, as potentially causing an “overhang” on CDL’s shares.
UOB Kay Hian said it has downgraded the CDL’s shares from “buy” to “hold” due to the “very public leadership fracture”, alongside a drastic cut in target price from S$7 to S$4.60.
The company’s latest earnings report, which was released on Wednesday as the family feud broke out into the open, also fell short of analysts’ estimates, said the brokerage’s research head Adrian Loh. For 2024, CDL posted a 37 per cent plunge in annual net profit to S$201.3 million.
“While the company has extremely valuable assets in Singapore and globally, we believe the stock will likely find it difficult to perform given this overhang,” Mr Loh said.
OCBC Investment Research also expects uncertainties over the company’s outlook and a “potential overhang on its share price” until the father-son feud is resolved.
Other potential dampeners include a cloudy global economic outlook and the continued impact of earlier property cooling measures in Singapore.
The research house held on to its “buy” call on CDL but lowered its fair value estimate to S$6.02 to S$6.57.
Likewise, DBS Group Research cut its target price to S$6.70, from S$10.50 previously, while maintaining a “buy” call.
Analysts Derek Tan and Tabitha Foo noted that the boardroom dispute has cast a cloud over the company’s strategic direction and will likely cause share price volatility in the near term.
That said, the DBS analysts noted that CDL’s “fundamentals remain intact” with key management, like its chief operating officer and chief financial officer, still running the company.
They expect the company’s core businesses, such as property development, hotels, and investment properties which are “hard assets generating revenue and cash flow”, to remain unaffected.
Should the dispute be resolved, the company will see a “renewed focus on driving shareholder returns and profitability” which will in turn support a “gradual recovery” in share price, the DBS analysts said in a note on Feb 27.
