Ascott Residence Trust - OCBC Investment 2020-11-16: Green Shoots Of Recovery

ASCOTT RESIDENCE TRUST (SGX:HMN) | SGinvestors.io ASCOTT RESIDENCE TRUST (SGX:HMN)

Ascott Residence Trust - Green Shoots Of Recovery

  • Worst is likely over for Ascott Residence Trust.
  • Beneficiary of vaccine development.
  • Higher fair value estimate of S$1.20.



Sequential improvement in RevPAU

  • While Ascott Residence Trust (SGX:HMN)’s 3Q20 portfolio RevPAU fell 70% y-o-y to S$47, we saw a 27% improvement on a q-o-q basis. Average portfolio occupancy increased from 30% in 2Q to 40% in 3Q20. The recovery was largely driven by easing travel restrictions, reopening of temporarily closed properties, recovery in domestic travel in some markets and block bookings from government.
  • As of 29 Oct 2020, 93% of Ascott Residence Trust's properties are operational while six properties remain closed due to low occupancy or to minimise costs. Recall that 21 properties were temporarily closed in 1H20. Ascott Residence Trust reopened 15 properties in 3Q and we expect the remaining six properties to gradually reopen as situation normalises.


Attractive valuation

  • Pfizer’s announcement of favourable phase 3 data on its COVID-19 vaccine which is ‘more than 90% effective' is definitely a good news for the hospitality sector, and this was reflected in the strong share price performance of hospitality names last week. As at 13 Nov’s close, Ascott Residence Trust is trading at 0.8x forward P/B which is almost 1 s.d. below its historical mean of 0.88x. We find valuations undemanding, especially given the positive vaccine development.


Ascott Residence Trust remains our top pick within the hospitality sector






Chu Peng OCBC Investment Research | https://www.iocbc.com/ 2020-11-16
SGX Stock Analyst Report BUY MAINTAIN BUY 1.20 UP 0.970



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