Hospitality REITs - OCBC Investment 2016-03-10: Outlook still largely cautious

CDL HOSPITALITY TRUSTS CDLHT J85.SI ASCOTT RESIDENCE TRUST A68U.SI

Hospitality REITs: Outlook still largely cautious

Recent statistics released from Singapore Tourism Board (STB) revealed that overall international visitor arrivals to Singapore grew by a marginal 0.9% to 15.2m in 2015. This comes in at close to the mid-end of STB’s forecast range of 15.1-15.5m visitors for the full year.
Tourism receipts dipped 6.8% to S$22.0b.

Although monthly visitor arrivals increased for eight consecutive months on a YoY basis from May to Dec, hospitality players remain largely cautious on the outlook. This can be attributed to an uncertain macroeconomic environment and large incoming supply of hotel rooms.
Looking ahead, STB has projected international visitor arrivals to come in at 15.2-15.7m for 2016, implying growth of 0-3%. Tourism receipts are forecasted to grow 0-2% to S$22-22.4b.
Our preferred pick within the hospitality sector is Ascott Residence Trust [BUY; FV: S$1.28], given its more resilient extended-stay business model.
We also like CDL Hospitality Trusts [BUY; FV: S$1.38] for its cheap valuations.

Wong Teck Ching Andy CFA OCBC Securities | http://www.ocbcresearch.com/ 2016-03-10

OCBC Securities Analyst Report BUY Maintain BUY 1.28 Same 1.28

BUY Maintain BUY 1.38 Same 1.38