CDL in Turmoil: Governance Issues and Boardroom Feud Cast Doubt on Future

City Developments Limited (CDL) finds itself at a crossroads, with mounting governance concerns, internal family disputes, and an underperforming stock price raising questions about its future. Once a dominant force in Singapore’s real estate landscape, CDL now faces declining investor confidence, fueled by boardroom chaos and a lack of clear strategic direction.

Boardroom Feud and Governance Crisis

The turmoil within CDL exploded into public view on Feb 26, 2025, when Executive Chairman Kwek Leng Beng accused his son, CEO Sherman Kwek, of attempting a boardroom coup. This power struggle has led to sharply revised price targets for CDL’s stock, with RHB Research slashing its target price from S$7.30 to S$4.75, citing “major lapses in board independence and governance issues.”

Investors are now eagerly awaiting CDL’s Annual General Meeting (AGM) on Apr 23, 2025, which could provide clarity on the company’s governance and leadership structure. At the AGM:

• Newly appointed independent directors (IDs) Jennifer Duong Young and Wong Su-Yen—who joined without going through the nominating committee (NC)—will have to seek election.
• One-third of the board must retire and seek re-election, which will include Colin Ong and Wong Ai Ai, who stand on opposite sides of the ongoing dispute.
• The Kwek family, which controls nearly half of CDL’s shares, is expected to play a critical role in shaping the company’s governance structure moving forward.

Family Power Struggle Raises Deeper Questions

Beyond the Kwek father-son feud, CDL is also grappling with concerns about the dominance of family members within the company’s leadership:

• COO Kwek Eik Sheng, a nephew of Kwek Leng Beng, holds a key operational role.
• Vincent Yeo, who heads CDL Hospitality Trusts, is another family member with a senior leadership position.
• Catherine Wu, a former board member of CDL’s Millennium & Copthorne Hotels (M&C) division, has been accused by Sherman Kwek of playing a role in exacerbating tensions.

Investor watchdog group Securities Investors Association (Singapore) – Sias has raised several governance concerns, questioning:

• The reporting structure of CDL’s CEO and COO.
• The role of Catherine Wu while she was on M&C’s board.
• The process behind her appointment and resignation as an independent adviser to the M&C board.

The outcome of the AGM will likely signal how the company intends to rebuild governance credibility in the eyes of investors.

CDL’s Valuation: A Hidden Opportunity or a Risky Gamble?

CDL’s stock closed at S$5.03 on Mar 7, 2025, far below its net asset value (NAV) of S$10.17 per share and its revalued NAV (including investment properties and hotels) of S$19.86 per share. This massive discount suggests that the company could unlock substantial value by monetizing assets or restructuring operations.

Historically, CDL shares traded above S$10 before the COVID-19 pandemic, fueling speculation that a partial asset sale or full privatization could deliver significant upside to shareholders.

However, CDL’s challenges go beyond stock price undervaluation. Analysts warn that the company’s asset-heavy model and low return on equity (ROE) make it vulnerable to high debt costs.

Strategic Shift Needed: Follow CapitaLand’s Playbook?

CDL’s underperformance is in stark contrast to CapitaLand, which underwent a major restructuring in 2021. By privatizing its property development arm and listing its real estate investment and lodging business under CapitaLand Investment (CLI), CapitaLand unlocked value and significantly outperformed traditional property developers like CDL.

Some analysts believe CDL should pursue a similar transformation:

• RHB Research has suggested that privatization of part of the group and a shift toward an asset-light strategy could boost returns.
• A real estate investment trust (REIT) spin-off or strategic asset sales could also help unlock shareholder value.

CDL’s Future: Investment or Speculation?

With its deeply discounted share price and strong asset base, CDL offers a lottery-like investment—a small probability of a very large return. But without governance reforms, leadership clarity, and a strategic transformation, its stock remains a high-risk bet rather than a stable investment.

Key questions investors should ask ahead of CDL’s AGM:
✔ Will the governance structure be reformed to ensure board independence?
✔ Can CDL monetize assets or pivot to an asset-light strategy?
✔ How will the Kwek family power struggle impact long-term strategic decisions?

Unless CDL takes decisive action, its shares may continue to be a gamble rather than a compelling investment.

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