CDL HOSPITALITY TRUSTS (SGX:J85)
CDL Hospitality Trusts - Weak Performances Across Geographies
- Singapore, New Zealand and Japan were among the hardest hit.
- CDL Hospitality Trusts's RevPAR fell 15.0%-39.8% y-o-y across portfolio.
- Near-term outlook remains dim.
1QFY20 performance was impacted by COVID-19
- CDL Hospitality Trusts (SGX:J85)’s 1QFY20 result was significantly impacted by COVID-19. 1QFY20 revenue dropped 28.7% y-o-y to S$33.0m, with weak performances seen across its portfolio.
- Revenue was down 35.2% for its master leases and 8.4% for its managed hotels. New Zealand (-73.9% y-o-y decline in revenue) Singapore (-35.6% y-o-y), Japan (-30.6% y-o-y) and Maldives (-24.7% y-o-y) were the hardest hit countries.
- NPI fell 42.1% to S$19.6m, led by UK (- 84.1% y-o-y), New Zealand (-73.9% y-o-y) and Japan (-58.1% y-o-y) and Singapore (-38.5% y-o-y).
Sharp decline in RevPAR
- In view of COVID-19, CDL Hospitality Trusts’s properties are either closed or operating at low occupancies. This severely impacted its RevPAR, with declines ranging from -15.0% to - 39.8% y-o-y.
- For Singapore, RevPAR fell 39.8% y-o-y in 1QFY20, on the back of lower occupancy at 53.9% vs 87.2% in 4QFY19. The decline in RevPAR deteriorated further to -62.4% y-o-y for the first 22 days of Apr 2020, despite bulk-booking by government for returning Singapore residents to serve their two weeks of isolation (at lower ADR).
- The Singapore hotels also saw cancellations and postponement of major MICE social events. However, bookings from foreign workers affected by border closures e.g. closure of Malaysia from 18 Mar to 12 May could help to provide some buffer to the sharp decline in RevPAR.
Further adjustments to DPU forecasts for FY20/21F by -32%/-14%
- As of 31 March, CDL Hospitality Trusts’s gearing was up +2ppt q-o-q but remained healthy at 37.4%, mainly due to currency weakness. CDL Hospitality Trusts has debt headroom of S$410m/S$747m before hitting the 45% and 50% gearing limit.
- The two transactions CDL Hospitality Trusts announced earlier i.e. the divestment of Nototel Singapore Clarke Quay and the acquisition of W Singapore Sentosa Cove, will see the completion date extended to July 2020. Post-transactions, CDL Hospitality Trusts’s gearing and liquidity could be improved further.
- With the escalation of COVID- 19, we believe that CDL Hospitality Trusts’s earnings visibility remains low in the near-term. We revise our DPU forecasts for FY20/21F down by 32%/14% with an estimated 40-50% y-o-y (previously 30-40% y-o-y) fall in RevPAR for CDL Hospitality Trusts’s Singapore hotels.
- After adjustments, our fair value estimate decreases from S$1.09 to S$0.92.
- 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/
2020-04-28
SGX Stock
Analyst Report
0.92
DOWN
1.090
