CDL HOSPITALITY TRUSTS
CDLHT
J85.SI
CDL Hospitality Trusts - Challenging Environment For Singapore Hoteliers
- CDLHT posted negative 3Q15/9M15 DPS growth of 9.6/10.3% YoY, in line with our expectations.
- Maintain SELL and a DDM-derived SGD1.14 TP (19% downside). This was mainly on a weak performance by its Singapore hotels (3Q15 RevPAR: -5.7% YoY).
- While its Japanese assets did perform, thanks to successful government policies that boosted tourism, they constitute only c.4% of its net property income (NPI).
Weak performances were in line with our expectations.
- CDL Hospitality Trust’s (CDLHT) 3Q15/9M15 results were within our expectations as it reported negative DPS growth of 9.6% and 10.3% YoY respectively. This met c.71% of our full-year estimates.
- CDLHT’s 3Q15/9M15 revenue was up 2.4/0.5% YoY. This was mainly attributable to the acquisition of Japanese hotels in Dec 2014, which translated into a 9% (3Q15) and 9.7% YoY (9M15) decrease in its total income available for distribution.
- CDLHT’s gearing ratio rose to 36.5% (2Q15: 32%) due to the recent acquisition of Cambridge City Hotel in the UK.
The Singapore portfolio proved to be challenging as revenue/available room (RevPAR) was down 5.7% YoY.
- Due to new hotel supply amidst slower global economic growth, room rates within its portfolio suffered a 3.8% YoY drop in average room rate (ARR) of SGD209.
- In addition, the prolonged haze situation since early August has also dampened travel to Singapore.
- Given that the factors above are expected to persist in the near term, we retain our pessimistic view on Singapore’s hospitality sector.
Japanese hotels were the only performing asset in CDLHT’s portfolio.
- CDLHT’s assets in Australia, New Zealand and the Maldives were not spared by the weaker global economic environment – booking negative RevPAR growth vis-à-vis their respective previous years. On the other hand, the trust’s Japanese assets registered RevPAR growth of c.21% YoY. This was on foreign visitor arrivals to Japan growing c.49% YTD to 14.5m.
Maintain SELL, with an unchanged SGD1.14 TP.
- Our team believes that the hospitality industry is likely to remain a challenging one. This is due to the unfavourable supply demand dynamics amidst the slowing down of the global economy.
- Maintain SELL.
Ivan Looi
RHB Research
|
Ong Kian Lin
RHB Research
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http://www.rhbinvest.com.sg/
2015-10-30
RHB Research
SGX Stock
Analyst Report
1.14
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