Hospitality REITs - OCBC Investment 2016-04-12: Encouraging tourism statistics

Hospitality REITs - OCBC Investment 2016-04-12: Encouraging tourism statistics CDL HOSPITALITY TRUSTS CDLHT J85.SI  ASCOTT RESIDENCE TRUST A68U.SI 

Hospitality REITs: Encouraging tourism statistics 

  • Overall international visitor arrivals to Singapore registered a robust YoY growth of 11.9% to 1.33m for the month of Feb. This adds on to the momentum from Jan’s 12.7% YoY increase. 
  • The key driver for Feb’s figures was likely driven by the Singapore Airshow, which takes place on a biennial basis. 
  • Consequently, there were also encouraging data points on the hotels room front, as average occupancy rate in the industry rose 1.9 ppt QoQ and 1.0 ppt YoY to 85.8%, while RevPAR increased 8.5% QoQ and 5.1% YoY to S$219. 
  • Notwithstanding this positive monthly performance, we believe the outlook ahead remains largely cautious, given the uncertain macroeconomic environment and oversupply issue. 
  • Our preferred pick within the hospitality sector is Ascott Residence Trust [BUY; FV: S$1.29], given its more resilient extended-stay business model. 
  • We also like CDL Hospitality Trusts [BUY; FV: S$1.38] for its undemanding valuations.

Wong Teck Ching Andy CFA OCBC Securities | http://www.ocbcresearch.com/ 2016-04-12
OCBC Securities Analyst Report BUY Maintain BUY 1.29 Same 1.29
BUY Maintain BUY 1.38 Same 1.38