ASCOTT RESIDENCE TRUST (SGX:A68U)
Ascott Residence Trust - In-line Results
- Portfolio RevPAU fell 2% y-o-y.
- Gearing stands at 33.0% as at 30 Sep.
- Merger is expected to complete in Dec.
Stable 3Q results
- ASCOTT RESIDENCE TRUST (SGX:A68U) reported lower 3Q19 revenue of S$132.4m (-2% y-o-y), due to lower contribution (-S$2.3m) from the divestment of Ascott Raffles Place Singapore. Gross profit increased by 1% y-o-y to S$65.0m, mainly due to new accounting standard FRS 116 effective from 1 Jan 2019. See Ascott Residence Trust Announcements
- 3Q DPU rose 5% y-o-y to 1.91S cents. Excluding one-off divestment gains, 3QFY19 DPU was up 1% y-o-y to 1.73S cents, making up 24.5% of our full-year forecast, which we consider within expectations. See Ascott Residence Trust Dividend History.
Mixed performances
- Ascott Residence Trust's portfolio RevPAU decreased by 2% y-o-y to S$155, dragged by weaker exchange rates i.e AUD, GBP.
- Standouts include UK and Vietnam which saw a 9% RevPAU increase, largely driven by stronger corporate demand as well as leisure demand in the case of UK. Singapore also reported 2% y-o-y RevPAU growth in 3Q, aided by stronger demand, partially offset by higher costs.
- On the other hand, Ascott Residence Trust’s portfolio RevPAU was dragged by Australia (-15% y-o-y), China (-6% y-o-y) and US (-6% y-o-y). For Australia, the lower RevPAU was attributable to the softer demand in Melbourne, and the acquisition of Citadines Connect Sydney Airport, which has lower RevPAU compared to existing properties in Australia. Excluding Citadines Connect Sydney Airport, RevPAU would have fallen 4% y-o-y. China’s RevPAU were impacted by weaker corporate demand while US’ hotels RevPAU were weighed by competition from new supply.
Higher Fair Value estimate of S$1.41
- We continue to like Ascott Residence Trust for its highly geographically diversified portfolio of high quality assets amidst the ongoing macroeconomic uncertainties. After adjustments, our fair value increases from S$1.31 to S$1.41. See Ascott Residence Trust Share Price; Ascott Residence Trust Target Price.
- As at 31 Oct’s close, Ascott Residence Trust is trading with a 5.54% FY19F dividend yield and at 1.1x forward P/B.
- Gearing remained healthy at 33.0% with ~S$1.1b of debt headroom as at 30 Sep 2019.
OCBC Research Team
OCBC Investment Research
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https://www.iocbc.com/
2019-11-01
SGX Stock
Analyst Report
1.41
UP
1.310
