Far East Hospitality Trust - DBS Research 2020-02-03: Pure Play Status A Double-Edged Sword

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

Far East Hospitality Trust - Pure Play Status A Double-Edged Sword

  • Recent travel ban on inbound travellers from China to curb coronavirus spread in Singapore.
  • Hotel operating environment facing near term uncertainty.
  • Anticipate downside to RevPAR in the near term to cap share price performance.
  • Downgrade to HOLD, Target Price cut to S$0.69.



Downgrade to HOLD.



Where we differ – more conservative estimates with downside risk to room rates.

  • Our forecast is below consensus as we have only projected 3% recovery in RevPAR in 2020-2021 but we see downside risk in the near term as travellers stay away in the near term.
  • Approximately c.58% of rent revenues fixed, hence downside shielded. Approximately 58% of income from the hotel and serviced residence components are fixed within a master lease structure. The remaining c.19% and c.23% are derived from commercial premises with longer lease tenures and variable rents from hotels and service residences.
  • While the master lease structure incorporates elements of stability, variable rents from hotels and service residences may be shaved off, which will hit FY20F DPU.






Derek TAN DBS Group Research | Singapore Research Team DBS Research | https://www.dbsvickers.com/ 2020-02-03
SGX Stock Analyst Report HOLD DOWNGRADE BUY 0.690 DOWN 0.80



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