Iggy's Journal: UOB Kay Hian Puts an $11.85 Target on City Developments. Its Operating Profit Doesn't Cover the Interest Bill.
Iggy's Journal: UOB Kay Hian Puts an $11.85 Target on City Developments. Its Operating Profit Doesn't Cover the Interest Bill.
25 September 2026, Evening
Video Release
I keep coming back to one number on this one: 0.99 times interest coverage. CDL's RNAV story may well be real, but paper asset value doesn't pay an interest bill, and that's the gap between the target price and what the balance sheet is actually telling me right now.
The Numbers
UOB Kay Hian's $11.85 target depends on actual, fairly priced disposals happening, not simply on a strategic review headline being announced. The numbers underneath tell a harder story. Gearing sits at 69 percent, nearly double the 35 percent ceiling I use as a hard gate. Net debt to EBITDA is at 15.7 times, well past the 10 times mark I treat as a red flag. Interest coverage is 0.99 times, meaning operating profit doesn't fully cover the interest bill, and that's been compounded by two consecutive years of negative operating cash flow. The 3.83 percent yield clears my 3.2 percent forensic floor, but it misses the 4.7 percent hurdle by a meaningful margin.
My Personal Take
For a CPF, SRS, or dividend portfolio, this is exactly the kind of setup where a genuinely compelling growth story and a genuinely concerning balance sheet can both be true at the same time, and the second one doesn't go away just because the first one gets more airtime. Iggy's Forensic Zone on this one is Zone 5, Red Zone, and that verdict comes straight from the coverage ratio, the gearing, and the cash flow trend, not from any view on whether the disposal strategy itself is a good idea. The number I actually want to see next isn't another target price, it's the first signed disposal price measured against book value. That's the figure that tells you whether the RNAV story is real money or still just a plan. Full breakdown of how I'm weighing the target against the balance sheet is in today's video.
📺 Free YouTube: https://youtu.be/ELPnYvPW4no
⭐ Members Edition YouTube: https://youtu.be/IrpM6d-lRfA
📩 Substack: https://investingiguana.com/p/uob-kay-hian-puts-an-1185-target
Get everything, full-length videos and full Substack analysis on both platforms, full Red Zone watchlist, forensic cheatsheets, with the YouTube/Substack Combo, S$12/month.
Not financial advice. Iggy's Forensic Compliance Standards apply.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
