FAR EAST HOSPITALITY TRUST
Q5T.SI
Far East Hospitality Trust (FEHT) - SOFT RESULTS AS EXPECTED
- 3Q15 DPU slipped 9.1% YoY
- RevPARs and RevPAUs both lower YoY
- No change to forecasts, rating and FV
3Q15 results in-line with expectations
- Far East Hospitality Trust (FEHT) reported its 3Q15 results which met our expectations.
- Operational performance remained muted, with gross revenue falling 4.8% YoY to S$29.7m, as a 3.8% growth in its retail and office revenue to S$6.1m was unable to offset a 6.8% decline from its master lease rental to S$23.6m.
- DPU slipped 9.1% to 1.20 S cents, attributable largely to a lower topline and higher finance expenses. However, this was an encouraging improvement of 3.4% on a QoQ basis.
- For 9M15, FEHT’s gross revenue was lower by 6.2% at S$85.8m, and this formed 72.4% of our FY15 forecast. DPU of 3.43 S cents represented a dip of 11.1%, and constituted 73.8% of our full-year projection.
Operational trends still reflect challenging outlook
- RevPAR and RevPAU for FEHT’s Hotels and Serviced Residences (SR) segments remained weak. This was underpinned by a challenging operating environment in light of sluggishness in corporate travel demand as well as softness in leisure travel due to a relatively strong SGD and haze situation.
- A positive came from stable occupancy rates for the quarter (Hotels: +0.3 ppt to 87.4%; SR: -2.0 ppt to 90.2%. However, as average daily rate (ADR) fell 6.0% to S$172 for its Hotels segment and 7.2% for its SR to S$232, this culminated in RevPAR and RevPAU declining by 5.6% and 9.2% YoY to S$151 and S$209, respectively.
- Performance for its SR was also impacted by ongoing refurbishment at Regency House and a slowdown in the Banking & Finance and Oil & Gas industries which resulted in less re-location and training to Singapore.
Maintain HOLD
- Looking ahead, FEHT highlighted that industry conditions are expected to remain tough, given the subdued macroeconomic landscape and upcoming hotel supply.
- Nevertheless, management said that the month of October had been better-than-expected despite the haze situation. FEHT will continue its AEIs and will seek to improve its online presence and marketing efforts.
- Given this in-line set of results, we opt to retain our forecasts, HOLD rating and S$0.67 fair value estimate on FEHT.
Andy Wong Teck Ching CFA
OCBC Securities
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http://www.ocbcresearch.com/
2015-11-04
OCBC Securities
SGX Stock
Analyst Report
0.67
Same
0.67
