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

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


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