CDL Hospitality Trusts - Maybank Kim Eng 2020-07-29: Slow Reopening, Low Visibility

CDL HOSPITALITY TRUSTS (SGX:J85) | SGinvestors.io CDL HOSPITALITY TRUSTS (SGX:J85)

CDL Hospitality Trusts - Slow Reopening, Low Visibility


Weak macros, prefer Ascott Residence Trust

  • CDL Hospitality Trusts (SGX:J85)’s 1H20 DPU, -64% y-o-y and -69% HoH, reflects challenging macros, with its overseas properties temporarily closed or operating at significantly lower occupancies. We see a slow DPU recovery into 2H with a reopening of its hotels in Italy, Maldives and the UK, while the transient demand from government-related businesses supporting its Singapore and New Zealand occupancies will likely ease off in 4Q.
  • CDL Hospitality Trusts' balance sheet remains sound at 37.1% leverage with SGD0.8m debt headroom. We maintain our forecasts and SGD0.95 DDM-based Target Price (COE: 10.3%, LTG: 2.0%).
  • While we see improving fundamentals against a gradual pick-up of cross-border travel, demand visibility into FY21 remains weak. We prefer Ascott Residence Trust (SGX:HMN) (BUY, Target Price SGD1.05, see report: Ascott Residence Trust - Maybank Kim Eng 2020-07-28: Longing For Long-stays) for its diversified portfolio, long-stay focused assets, and upside from capital distributions amid slower DPU growth.



Government support cushioned Singapore NPI

  • CDL Hospitality Trusts' revenue and NPI for its Singapore hotels fell 45.0% y-o-y and 48.7% y-o-y in 1H20 due to the impact from the pandemic since end-Jan 2020. RevPAR was down 49.2% y-o-y on lower ARR (-36.1% y-o-y), while occupancy declined by 17.6ppts to 68.2%. This was supported by demand for dedicated facilities for isolation purposes and foreign (Malaysian) workers affected by border closures, which will likely ease off in 4Q20.
  • W Hotel, acquired in Jul has seen 50% weekend occupancy since staycations were approved, and should improve further towards the year-end.


Overseas NPIs mostly down on lockdowns, closures






Chua Su Tye Maybank Kim Eng Research | https://www.maybank-ke.com.sg/ 2020-07-29
SGX Stock Analyst Report HOLD MAINTAIN HOLD 0.950 SAME 0.950



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