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Frasers Hospitality Trust - UOB Kay Hian 2015-10-30: Results above expectations

Frasers Hospitality Trust - UOB Kay Hian 2015-10-30: Results above expectations FRASERS HOSPITALITY TRUST ACV.SI 

Frasers Hospitality Trust - Results above expectations 

  • Results above expectations; Maintain BUY with an unchanged target of S$0.97 based on two-stage dividend discount model (required rate of return: 8.2% and terminal growth rate: 1.6%). 
  • Frasers Hospitality Trust (FHT) reported 4QFY15 DPU of 1.66 S cents, bringing DPU for the period of 14 Jul 14-30 Sep 15 to 7.56 S cents and exceeding the company’s expectations at IPO by 2.6%. 
  • Annualised FY15 DPU at 103.1% of full year estimates slightly beat our estimates mainly due to better-than-expected contribution from the Australia, UK and Japan, offsetting the softer performances from Singapore and Malaysia properties. 

 Operational highlights. 

  • Singapore RevPar was 4.6% below the company's estimates, with average occupancy at 80.4% and ADR at S$307. 
  • Malaysia's RevPar was also 6.2% below forecast. 
  • RevPar for Australia and the UK surprised FHT on the upside though, at 8.0% and 3.6% above estimates respectively.
  • Gearing has remained stable at 38.9% (38.8% in 3QFY15), while borrowing costs increased 20bp qoq to reach 2.4%. 

 Weakness in Singapore and Malaysia propped up by growth in Japan, Australia and the UK. 

  • The ongoing AEI at Intercontinental Singapore was temporarily disruptive (84 rooms taken out on average) while dimmer performance in Malaysia followed the three aviation tragedies and weak corporate demand from the lacklustre oil and gas segment. 
  • ANA Crowne Plaza Kobe beat IPO RevPAR estimates by 19.2% (NPI by 17%), as Japan saw a wave of international tourist arrivals in 8M15, increasing 49.1% yoy to reach over 12.9m visitors. 
  • Australia and the UK also beat NPI IPO estimates by 25% and 22% respectively. 

 AEI update. 

  • The ongoing AEI at Intercontinental Singapore (S$26m), which commenced this April is well on track for completion come Feb 16, with target ADR of S$350. 
  • Management has identified Novotel Sydney as the most likely candidate to see refurbishment next.


Vikrant Pandey UOB Kay Hian | Derek Chang UOB Kay Hian | http://research.uobkayhian.com/ 2015-10-30
UOB Kay Hian SGX Stock Analyst Report BUY Maintain BUY 0.97 Same 0.97


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