Ascott Residence Trust - Maybank Kim Eng 2019-05-02: Broader Base, Slower Growth

ASCOTT RESIDENCE TRUST (SGX:A68U) | SGinvestors.io ASCOTT RESIDENCE TRUST (SGX:A68U)

Ascott Residence Trust - Broader Base, Slower Growth


Singapore recovery intact, prefer CDLHT, FEHT.




Ascott Residence Trust's 1Q19 in line with MKE and street

  • Ascott Residence Trust's 1Q19 revenue increased 2.8% y-o-y while gross profit (excluding FRS 116 adjustments) rose by 1.7% y-o-y. Portfolio RevPAR rose 3.1% y-o-y to SGD133 as double-digit improvements in Singapore and the UK helped offset the weaker performance in the US (-4.8% y-o-y) and Vietnam (-1.4% y-o-y).
  • Gross profit from its ‘stable’ income rose 1.7% y-o-y, as its French master leases were renewed at lower rents, while there were 17.8-20.0% y-o-y jumps in Singapore and the UK.
  • Gross profit from its ‘growth’ income rose 12.1% y-o-y on stronger demand in Singapore, Japan and Philippines.


Strong quarter for Singapore, contribution set to fall

  • Ascott Residence Trust's Singapore revenue and gross profit increased 23.1% y-o-y and 35.0% y-o-y on stronger RevPAU, which jumped 21.8%. But its Singapore AUM is set to fall (from 20.8% to 15.4% of total AUM) with its proposed Ascott Raffles Place divestment, while its maiden co-living development property at one-north does not open until 2021.
  • We remain positive on the market’s growth fundamentals against rising demand and tapering 2018-2022 supply, but Ascott Residence Trust’s exposure remains low relative to other hospitality REITs.


A stronger balance sheet after capital recycling

  • Ascott Residence Trust's balance sheet should be strengthened by its recent deals in Singapore and Australia. Both its SGD353.3m divestment of Ascott Raffles Place at 2.0% exit yield and the AUD60.6m (SGD58.8m) acquisition of Citadines Connect Sydney Airport at > 6.0% EBITDA yield are set to be completed in May 2019.
  • Investors are likely awaiting corporate activity, ie, a possible merger with ASCENDAS HOSPITALITY TRUST (SGX:Q1P).





Chua Su Tye Maybank Kim Eng Research | https://www.maybank-ke.com.sg/ 2019-05-02
SGX Stock Analyst Report HOLD MAINTAIN HOLD 1.250 SAME 1.250



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