FRASERS HOSPITALITY TRUST
ACV.SI
Frasers Hospitality Trust - Acquisitions to drive growth
Strength in diversity.
- We maintain our BUY call on FHT with a TP of S$0.83.
- While investors should be concerned about its exposure to the Singapore market, we believe investors have overlooked the fact that the majority of the FHT’s portfolio (c.60%) is located in markets which are experiencing tailwinds.
- In addition, FHT’s core Singapore asset, InterContinental Hotel is about to complete its extensive renovations (end-Feb-16), which should allow the property to outperform the overall Singapore market.
Exposure to growing markets.
- Approximately 50% of FHT’s 1Q16 NPI was sourced from the growing markets of Australia (32%) and Japan (16%). FHT’s Australian and Japanese properties are beneficiaries of growing foreign tourists.
- In fact, FHT's recent purchase of Sofitel Sydney Wentworth deepens its exposure to the growing Sydney hospitality market.
Clear and visible acquisition pipeline.
- Through the strong support of its sponsor (Frasers Centrepoint Limited) and strategic partner (TCC Group), FHT has a clear and visible acquisition pipeline. This robust pipeline consists of 17 hotels and serviced residences located across Asia, Australia and Europe.
Valuation:
- Maintain BUY, TP of S$0.83 based on DCF.
- Stock offers a total return of 11%, supported by a high yield of 7.3%.
Key Risks to Our View:
- FX volatility. A key risk to our positive outlook is a significantly weaker AUD, MYR, JPY and GBP as Australia, Malaysia, Japan and UK contributes c.78% of FHT’s NPI.
Mervin Song CFA
DBS Vickers
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Derek Tan
DBS Vickers
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http://www.dbsvickers.com/
2016-04-05
DBS Vickers
SGX Stock
Analyst Report
0.83
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0.83
