CDL HOSPITALITY TRUSTS (SGX:J85)
CDL Hospitality Trusts - Outbreak Of Coronavirus Could Weigh On Travel Demand
- CDL Hospitality Trusts' 4QFY19 results in-line.
- Strong performance from SG hotels.
- Expecting near-term volatility.
4QFY19 DPU flat; full year DPU was down 2.6% y-o-y
- CDL HOSPITALITY TRUSTS (SGX:J85)'s 4Q19 results were within expectations. 4Q19 NPI dropped 1.2% y-o-y to S$38.0m, pulled down by lower contributions from CDL Hospitality Trusts’ overseas market which more than offset the strong performance from Singapore hotels.
- CDL Hospitality Trusts' 4Q19 DPU was flat y-o-y at 2.77 S cents. On a full-year basis, FY19 DPU decreased by 2.6% y-o-y to 9.02 S cents, due to lower NPI (-3.3% y-o-y) and higher interest expenses.
SG RevPAR up 4.3% in 4Q19
- In terms of operating metrics, CDL Hospitality Trusts’ Singapore RevPAR increased by 5.1% y-o-y in 4Q19, the strongest quarterly y-o-y RevPAR growth since 2012, driven by a 3.3% growth in ADR and 1.4ppt increase in occupancy.
- CDL Hospitality Trusts’ overseas market performances, however, were weak, with NPI falling between 3-31.2% y-o-y, with the exception of UK which saw a growth of 0.3%. The weak performances were mainly due to currency weakness (i.e. Australia, New Zealand), softer demand (i.e Japan, UK, Germany) and also supply pressures (Japan, New Zealand, Maldives, UK) which are likely to continue to FY20.
Lower Fair Value estimate of S$1.62
- Management disclosed that the booking cancellations so far have not had any material impact on their business.
- CDL Hospitality Trusts’ Singapore RevPAR rose ~4% y-o-y for the first 28 days of Jan 2020. However, as Singapore is CDL Hospitality Trusts’ key and best performing market (~62.3% of FY19 NPI) whereby Chinese tourists contributed ~10% of CDL Hospitality Trusts’ Singapore business, CDL Hospitality Trusts’ performance could be badly hit should the situation in Singapore escalate further.
- After adjustments, our fair value estimate decreases from S$1.69 to S$1.62. Downgrade from Buy to HOLD.
- See CDL Hospitality Trusts Share Price; CDL Hospitality Trusts Target Price; CDL Hospitality Trusts Analyst Reports; CDL Hospitality Trusts Dividend History; CDL Hospitality Trusts Announcements; CDL Hospitality Trusts Latest News.
Chu Peng
OCBC Investment Research
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https://www.iocbc.com/
2020-02-03
SGX Stock
Analyst Report
1.62
DOWN
1.690
