Far East Hospitality Trust - Maybank Kim Eng 2019-10-31: Pure-Play Into Recovery

FAR EAST HOSPITALITY TRUST (SGX:Q5T) | SGinvestors.io FAR EAST HOSPITALITY TRUST (SGX:Q5T)

Far East Hospitality Trust - Pure-Play Into Recovery


FEHT's 3Q19 DPU in line with Street, Recovery Intact, BUY




Serviced residences looking up

  • Far East Hospitality Trust's revenue and NPI increased 1.2% y-o-y and 1.3% y-o-y in 3Q19 with higher occupancies at both its hotels and SRs, which rose y-o-y from 90.7% to 92.3% and 87.2% to 88.2%, respectively. While RevPAR for its hotels was flat due to weaker corporate demand, RevPAU for its SRs rose 5.4% y-o-y. Management attributed this to growth in shorter-stay bookings at 4.4% y-o-y higher ADRs, supported by demand from the FMCG services and logistics sectors, and some switch-over from leisure bookings.
  • We see RevPARs/ReVPAUs improving further into 2020 against high occupancies and a stronger corporate events calendar. We forecast RevPAR growth of 2-5% for 2020-21E. This would be led by stronger volume growth and a pick-up in yields.


Recovery strengthened by easing supply, visible DPU growth levers

  • RevPAR growth will be strengthened by easing supply. Savills estimates new hotel rooms to slow to 1.4%% CAGR in 2018-20E from 5.1% in 2013-17.
  • We see medium term DPU growth levers from its sponsor’s ROFR pipeline of 1,767 rooms and its remaining interests in three Sentosa hotels:
    1. The Village with 606 rooms,
    2. Outpost (193), and
    3. Barracks (40).
  • We see the 116-room Oasia West Residences as a closer acquisition target, backed by favourable demand fundamentals.





Chua Su Tye Maybank Kim Eng Research | https://www.maybank-ke.com.sg/ 2019-10-31
SGX Stock Analyst Report BUY MAINTAIN BUY 0.800 SAME 0.800



Advertisement



MOST TALKED ABOUT STOCKS / REITS OF THE WEEK



loading.......



ANALYSTS SAY


loading.......