ASCOTT RESIDENCE TRUST
A68U.SI
ASCENDAS HOSPITALITY TRUST
Q1P.SI
CDL HOSPITALITY TRUSTS
J85.SI
FRASERS HOSPITALITY TRUST
ACV.SI
OUE HOSPITALITY TRUST
SK7.SI
FAR EAST HOSPITALITY TRUST
Q5T.SI
Singapore Hospitality - Continues to struggle
- November 2015 RevPAR down 5% despite 4% rebound in tourist arrivals
- Expect hospitality REITs to report soft 4Q15 results
- Supply headwinds to persist heading into 2016
- Top pick – CDREIT (BUY, TP S$1.54)
What’s new
- Singapore Tourism Board (STB) released the latest November 2015 statistics which indicates that the Singapore hospitality market continues to struggle on the back of a 6-7% increase in new room supply.
- Overall RevPAR for Nov15 dropped 5.1% y-o-y to S$207, taking 11M15 industry RevPAR to S$210 (-5.2% y-o-y). The main driver for the decline in RevPAR was the 4% drop in ADR to S$243 while occupancy only saw a 0.7% dip to 85.3%.
- Weakness was seen across all sub-segments (Economy: - 4.9%, Mid-Tier: -6.0%, Upscale: -4.6%) with the exception of Luxury (+1.8%).
- The weak hotel performance was in spite of tourist arrivals jumping 4.3% y-o-y to 1.2m. The bounce in November was largely attributed to visitors from China (+20% y-o-y) and India (+21.5%), partially offset by declines from Indonesia (-8.7%). 11M15 tourist arrivals were up 0.4% y-o-y following a recovery since May.
Our view
- The weakness in RevPAR and recovery in tourist arrivals was in line with our expectations, and the Singapore hospitality market is on track to hit our estimate of a 5% fall in RevPAR and total visitor arrivals of c.15m in 2015.
- In 2016, we expect the recovery in China arrivals to continue and combined with the boost from an increased number of large conferences, should translate to a 3% bounce in overall tourist arrivals. Nevertheless, on the back of 6-7% increase in new room supply, we expect overall RevPAR to dip 4%.
- Against this backdrop, we expect hotels under various SREITs to remain under pressure with the hospitality REITS delivering weak 4Q15 results.
- Nevertheless, with share prices of various hospitality REITs having already corrected significantly, value is emerging.
- Our top pick remains CDREIT (BUY, TP S$1.54), given extremely depressed valuations. The implied price per key for CDREIT’s Singapore portfolio stands at c.S$440k which is below recent market transactions of above S$650k.
Mervin Song CFA
DBS Vickers
|
Derek Tan
DBS Vickers
|
http://www.dbsvickers.com/
2016-01-21
CIMB Securities
SGX Stock
Analyst Report
1.33
Same
1.33
0.77
Same
0.77
1.54
Same
1.54
0.83
Same
0.83
0.91
Same
0.91
0.63
Same
0.63
