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On Thursday, CLSA analysts downgraded City Developments stock (CIT:SP) (OTC: CDEVY), a prominent player in the Real Estate Management & Development industry, from an Outperform to a Hold rating. According to InvestingPro data, the company maintains strong financials with a current ratio of 1.58, indicating healthy liquidity. This change follows the company’s decision to sell its 50.1% stake in South Beach to IOI Properties for S$834.2 million. The transaction is expected to generate disposal gains of S$465 million and reduce the company’s gearing from 117% to 103%. The company’s strong financial position is further evidenced by its impressive free cash flow yield of 17% and a 34-year track record of consistent dividend payments.
Despite the reduction in gearing, CLSA analysts noted that the level remains too high to allow for a special dividend. As a result, they adjusted their financial forecasts, extending them to the fiscal year 2026.
The analysts also revised their Real Net Asset Value (RNAV) estimates, lowering it from S$11.54 for FY25 to S$9.92 for FY26. Consequently, the price target for City Developments stock has been reduced from SGD6.41 to SGD5.35.
This adjustment in rating and price target reflects the analysts’ updated outlook on the company’s financial position and future prospects following the divestment.
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