Frasers Hospitality Trust - UOB Kay Hian 2017-01-27: 4Q16 Results Of FHT In Line

Frasers Hospitality Trust - UOB Kay Hian 2017-01-27: 4Q16 Results Of FHT In Line FRASERS HOSPITALITY TRUST ACV.SI

REITs − Singapore - 4Q16 Results Of CDREIT Above Expectations, FHT In Line

  • Frasers Hospitality Trust (FHT)  saw DPU dilution from last October’s rights issue. 
  • AEI completion at the Intercontinental Singapore saw RevPAR improve on higher occupancy. 
  • Maintain BUY with a target price of S$0.74.



WHAT’S NEW

  • CDL Hospitality Trust (CDREIT) and Frasers Hospitality Trust (FHT) reported their latest quarterly results.


ACTION 


Frasers Hospitality Trust (FHT SP/BUY/S$0.66/Target: S$0.74) 

  • Results in line with expectations; maintain BUY with an unchanged target of S$0.74. This is based on two-stage DDM (required rate of return: 8.5% and terminal growth rate: 1.4%). 
  • 1QFY17 gross revenue and net property income grew 3.2% and 1.3% yoy respectively, after the acquisition of Novotel Melbourne and Maritim Hotel Dresden. 
  • 1QFY17 DPU fell 18.9% yoy, despite distributable income growth of 3.1% yoy, due to unit base expansion (+27.2% yoy) post FHT’s rights issue in Oct 16. 
  • The results were line with expectations, with 1QFY17 DPU representing 26% of our full-year forecast.

Rosy Australia performance. 

  • The Australian portfolio (entirely in Sydney) turned in a robust performance, propped up by recently-acquired Novotel Melbourne on Collins.
  • Australia clocked in visitor arrival growth of 11.4% yoy in 9M16, with a 18.0% yoy increase in Chinese arrivals. Sydney hotels continue to be a beneficiary of both healthy leisure and corporate demand.

Room recovery boosted Singapore performance. 

  • Full restoration of room inventory post AEI completion at the Intercontinental Singapore in end-Feb 16 saw 1QFY17 Singapore RevPAR improve on higher occupancy. However, we note that Fraser Suites registered lower RevPar on weaker demand from oil & gas (O&G) corporates.
  • Intercontinental Singapore could underpin further growth, with management previously noting that the asset has not reached optimal performance.




Vikrant Pandey UOB Kay Hian | Derek Chang UOB Kay Hian | http://research.uobkayhian.com/ 2017-01-27
UOB Kay Hian SGX Stock Analyst Report BUY Maintain BUY 0.740 Same 0.740



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