CDL Hospitality Trusts - Maybank Kim Eng 2021-10-31: RevPAR On A Mend

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CDL HOSPITALITY TRUSTS (SGX:J85)

CDL Hospitality Trusts - RevPAR On A Mend

Stronger overseas contributions

• CDL Hospitality Trusts (SGX:J85)’s revenue/NPI jumped 32.8% y-o-y/34.8% y-o-y and 24.0% q-o-q/19.0% q-o-q in 3Q21, with RevPAR improvements in Europe, New Zealand and the Maldives, contributing ~58% of NPI. Rising vaccination rates and gradual border reopening suggest better fundamentals in FY22, but demand visibility especially for its Singapore hotels remains low.

Singapore recovery needs firmer footing

• NPI for CDL Hospitality Trusts's Singapore hotels fell 7.4% y-o-y with the divestment of NCQ but it was up 3.1% q-o-q, as RevPAR rose y-o-y to S$76 (from S$75) and stayed flat q-o-q. Room rates for five of its six properties will be capped in the near term with the extension of government contracts to early 2022, but W’s performance could surpass 4Q20, on the back of buoyant staycation demand, and better pricing power.
• A steady expansion of VTLs bodes well for RevPAR recovery in FY22, but visibility is still weak, and needs support from a stronger corporate events calendar.

Overseas RevPARs set to rise

• CDL Hospitality Trusts's overseas hotels were stronger y-o-y, except for Australia, with domestic interstate travel restrictions and divestment of Novotel Brisbane. NPI rose in aggregate for its properties in Europe, New Zealand, and the Maldives at ~245% y-o-y and ~57% q-o-q, with reopening backed by pent-up demand in the UK, Germany and Italy, as well as higher utilisation of its managed isolation hotel in Auckland.
• We see stronger RevPAR growth in FY22, with rising domestic demand (in the UK), return of large scale events (Germany, Italy) and easing of border restrictions (for New Zealand).

Sound balance sheet, eyeing AUM growth

• CDL Hospitality Trusts's gearing party acquisitions (in Australia, Japan or the UK).
• See
  • CDL Hospitality Trusts's Share Price,
  • CDL Hospitality Trusts's Target Price,
  • CDL Hospitality Trusts's Analyst Reports,
  • CDL Hospitality Trusts's Dividend History,
  • CDL Hospitality Trusts's Announcements,
  • CDL Hospitality Trusts's Latest News.
• We have fine-tuned estimates.
• We prefer
  • Ascott Residence Trust (SGX:HMN) for its long-stay assets and upside from capital distributions amid slower DPU growth, (Ascott Residence Trust - Maybank Kim Eng 2021-11-01: Adding Resiliency), and
  • Far East Hospitality Trust (SGX:Q5T), for its Singapore-focused AUM and master lease contributions (Far East Hospitality Trust - Maybank Kim Eng 2021-10-29: Recovery In Sight; Awaiting RevPAR Recovery).

Chua Su Tye Maybank Kim Eng Research | https://www.maybank-ke.com.sg/ 2021-10-31

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