Dear Readers, I’m pleased to read that the recent saga involving City Developments Limited (CDL) has reached a positive resolution. Executive Chairman Mr. Kwek Leng Beng has decided to withdraw the lawsuit against CDL’s Group CEO, Mr. Sherman Kwek. This development is likely to enhance investor confidence in both the company and its stock.
However, I believe that the conclusion of this saga marks a turning point for CDL; we cannot simply return to business as usual. The events that transpired have revealed significant differences in the strategic direction among the management team. Despite these differences, there is a shared objective: to unlock, grow, and create value for CDL and its shareholders. As such, I anticipate a period of restructuring within the company.
One area that I believe may come under scrutiny is CDL Hospitality Trust, as the group looks to explore potential avenues for value creation.
Let’s take a closer look at CDL Hospitality Trust. Over the past year, the trust has seen a decline of 15.6%. The situation is even more pronounced over the last five years, with a decrease of 25.5%. From a fundamental perspective, the trust appears undervalued, currently trading at a Price-to-Book ratio of 0.574. Additionally, it offers an attractive dividend yield of approximately 6.4% per annum.
Millennium & Copthorne Hotels Ltd, a subsidiary of Hong Leong and part of the CDL group, holds a significant stake of 28.2% in CDL Hospitality Trust. Will Hong Leong Group divest CDL Hospitality Trust next to unlock value for investors and Group?
Given these factors, I encourage you to keep an eye on potential developments regarding CDL Hospitality Trust in the near future.
Note: This post does not constitute a recommendation for investing in CDL Hospitality Trust. Investors are advised to conduct their own due diligence before making any investment decisions.