Far East Hospitality Trust - OCBC Investment 2020-11-03: Some Green Shoots Of Recovery

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

Far East Hospitality Trust - Some Green Shoots Of Recovery

  • Far East Hospitality Trust's RevPAR/PAU extended declines in 3Q.
  • Isolation and MCO business likely to taper-off in 4Q.
  • Downside protection from fixed rent structure.



Hotels remained at fixed rent while Serviced Residences were above fixed rent

  • Far East Hospitality Trust (SGX:Q5T)’s released a 3Q20 business update. 3Q20 gross revenue declined 33.2% y-o-y to S$20.6m while NPI fell 36.4% y-o-y to S$17.9m, dragged by lower master lease rental for hotels and Serviced Residences (SRs), as well as weaker performance from commercial premises. On a segmental basis, hotels saw fixed rent for its master leases while the Serviced Residences segment remained above the fixed rent.


Hotels RevPAR fell 55.8% in 3Q

  • In terms of RevPAR, hotels RevPAR fell 55.8% y-o-y from S$152 to S$67 in 3Q, on the back of 58.1% y-o-y decrease in ADR and a 5ppt increase in occupancy. Occupancy rate continued to be supported by government contracts and booking from local companies to accommodate their Malaysian workers in Singapore due to the Malaysian Control Order (MCO) (at much lower ADR).
  • We understand that Far East Hospitality Trust needs to receive at least S$110 RevPAR/RePAU for hotels/Serviced Residences to receive variable income.

Serviced Residences RevPAU fell 4.7% y-o-y helped by Serviced Residences’ long-stay leases from corporate business






Chu Peng OCBC Investment Research | https://www.iocbc.com/ 2020-11-03
SGX Stock Analyst Report HOLD DOWNGRADE BUY 0.58 UP 0.520



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