Singapore Hospitality REITs - CGS-CIMB Research 2021-04-29: Ascott Residence Trust & CDL Hospitality Trusts 1QFY21 Business Updates

Singapore Hospitality REITs - CGS-CIMB Research | SGinvestors.io ASCOTT RESIDENCE TRUST (SGX:HMN) CDL HOSPITALITY TRUSTS (SGX:J85)

Singapore Hospitality REITs - Ascott Residence Trust & CDL Hospitality Trusts 1QFY21 Business Updates



Ascott Residence Trust and CDL Hospitality Trusts's 1QFY21 business updates



SG hotels largely supported by government contracts

  • CDL Hospitality Trusts’s SG RevPAR declined ~25% q-o-q due to lower demand from staycation in 1QFY21 while Ascott Residence Trust’s SG RevPAU improved 14% q-o-q.
  • On a y-o-y basis, Ascott Residence Trust experienced a 42% decline in RevPAU while CDL Hospitality Trusts’s fell 34% given the full-quarter COVID-19 impact in 1QFY21.
  • The REITs’ Singapore business would largely be supported by government contracts until at least mid-2021, in our view.


Mixed overseas performance

  • Overseas performance was mixed for both REITs.
    • Ascott Residence Trust saw q-o-q improvement in Australia (+46%) and the US (+16%) supported by isolation business as well as leisure demand and long stays in the US. While China (-9%) and Vietnam (-4%) RevPAUs were weaker q-o-q, we consider them to be relatively stable, supported by long-stay guests.
    • For CDL Hospitality Trusts, Maldives saw strong +114% y-o-y in RevPAR driven by the operation ramp-up of Raffles Maldives and leisure demand from Eastern Europe. NZ (+5% q-o-q) was supported by higher occupancy from in isolation business. Australia continued to be supported by fixed rents but this is expected to decline after leases expire on 30 Apr 2021.
  • UK, Europe and Japan were generally weak for both REITs due to lockdowns in the countries.


Remain active in acquisitions

  • Ascott Residence Trust made a second rental housing acquisition in Sapporo for S$25.5m (EBITDA yield of 4%), increasing its asset allocation in longer-stay properties. The acquisition is expected to be DPU accretive and completed in 2Q21. Long-stay assets accounted for 7% of Ascott Residence Trust’s total assets and it hopes to bring this to 10-15% going forward.
  • CDL Hospitality Trusts is also actively evaluating acquisition opportunities.

Reiterate ADD on Ascott Residence Trust and CDL Hospitality Trusts

  • We understand that there is a strong desire to travel although demand is affected whenever there is a lockdown. Both leisure demand and queries from corporates have also picked up recently although booking window remains narrow. We expect travelling activities to resume gradually as more people are vaccinated.
  • See
  • Upside/downside risks include faster travel resumption/resurgence of COVID-19 cases.





EING Kar Mei CFA CGS-CIMB Research | LOCK Mun Yee CGS-CIMB Research | https://www.cgs-cimb.com 2021-04-29
SGX Stock Analyst Report ADD MAINTAIN ADD 1.200 SAME 1.200
ADD MAINTAIN ADD 1.430 SAME 1.430



Advertisement



MOST TALKED ABOUT STOCKS / REITS OF THE WEEK



loading.......



ANALYSTS SAY


loading.......