CDL Hospitality Trusts - OCBC Investment 2021-11-01: Greater Recovery Visibility

CDL HOSPITALITY TRUSTS (SGX:J85)

CDL Hospitality Trusts - Greater Recovery Visibility

CDL Hospitality Trusts (CDLHT, SGX:J85)’ 3Q21 revenue and NPI grew 32.8% and 34.8% y-o-y to S$40.0m and S$20.5m, respectively. NPI improved y-o-y for all markets with the exception of Singapore and Australia, primarily due to the divestment of Novotel Singapore Clarke Quay and Novotel Brisbane in 2020.
On a q-o-q basis, NPI grew 19%, mainly due to better performances from W Hotel (healthy staycation demand), New Zealand (continued managed isolation business), UK hotels (strong domestic leisure demand) and Angsana Velavaru in the Maldives (temporary suspension of visas from South Asian countries were lifted in mid- Jul 2021).

For Singapore (including W Hotel), RevPAR was up 0.4% y-o-y to S$76 in 3Q21, due to higher ADR (+21.6% y-o-y to S$104), while occupancy rate fell 15.3 ppt y-o-y to 72.3%. On a q-o-q basis, RevPAR for CDLHT’s Singapore hotels was flat. Excluding W Hotel, RevPAR would have fallen by 5.6% y-o-y to S$61 on the back of lower occupancy rate.
Five out of CDLHT’s six Singapore hotels remained block booked by the government for isolation business which is expected to continue till 1Q22.
Management shared that forward-bookings at W Hotel in Nov and Dec 2021 were strong (slightly above the same period last year with higher room rates) despite the launch of Vaccinated Travel Lane (VTL).

Overall, CDLHT saw improvement in RevPAR performances for its overseas hotels in 3Q21. Australia was the only market which reported a decline of 20.5% y-o-y in RevPAR in 3Q21, affected by interstate travel restriction into Western Australia.
On a q-o-q basis, RevPAR for Australia and the Maldives hotels fell 52% and 1.3% q-o-q, respectively while the remaining markets saw strong improvement of RevPAR.
After adjustments, we maintain our fair value estimate for CDLHT at S$1.34.
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CDLHT ranks below industry average in terms of governance and social issues.
CDLHT’s board lacks independent director majority, and fully independent audit and pay committees which may hinder its oversight of management and financial reporting practices. Moreover, CDLHT shows limited evidence of employee development initiatives.
However, evidence suggests that CDLHT continues to promote green investment strategies in managing its property portfolio. Its environment score is on par with industry average.

Chu Peng OCBC Investment Research | https://www.iocbc.com/ 2021-11-01

SGX Stock Analyst Report BUY MAINTAIN BUY 1.340 SAME 1.340