CDL HOSPITALITY TRUSTS
CDLHT
J85.SI
CDL Hospitality Trusts: Keeping our view
- Following Brexit, CDLHT was sold down 4.1% over two days to S$1.39 at the close of 27 Jun, on news that it has exposure to the UK.
- It has since recovered to S$1.46 as of yesterday and is trading at a forward FY16 yield of 7%.
- The impact of Brexit on CDLHT’s UK asset, the Hilton Cambridge City Centre (5.4% in terms of portfolio valuation as of 31 Dec 2015), is uncertain at this point in time.
- On one hand, UK hotels face the risk of depressed corporate demand should Brexit result in an economic downturn.
- Nonetheless we expect business activity in Cambridge, which is largely driven by life science companies, to be more resilient as compared to that within London. Furthermore, with the weakened pound, the hotel may receive strengthened demand from the leisure segment, given Cambridge's reputation as a tourist destination.
- As of 1Q16, CDLHT does not provide a breakdown of Cambridge’s revenue between corporate and transient demand.
- Given the Cambridge asset forms a small part of CDLHT's portfolio and the uncertain implications of Brexit on asset performance, we keep to our forecasts for FY16.
- Maintain HOLD on CDLHT with a fair value of S$1.38.
Deborah Ong
OCBC Securities
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http://www.ocbcresearch.com/
2016-07-12
OCBC Securities
Analyst Report
1.38
Same
1.38
