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Far East Hospitality Trust - Maybank Kim Eng 2021-10-29: Recovery In Sight; Awaiting RevPAR Recovery

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

Far East Hospitality Trust - Recovery In Sight; Awaiting RevPAR Recovery

  • Far East Hospitality Trust (SGX:Q5T)’s distributable income rose 12.5% y-o-y/47.7% q-o-q in 3Q21, with 9M21 up 3.0% y-o-y, underpinned by higher revenue/NPI at +0.7% y-o-y/+2.6% y-o-y and +2.4% q-o-q/+1.8% q-o-q. While its hotels should stay cushioned by government demand into 1Q22, RevPAR recovery remains in sight with Singapore’s steady reopening, and should strengthen in 2H22.
  • Far East Hospitality Trust remains our preferred play in a (slow) sector recovery, with the high proportion of minimum fixed rent from its master leases offering downside support amid soft RevPAR growth. We have fine-tuned estimates and kept our DDM- based target price (COE: 5.4%, LTG: 2.0%) for Far East Hospitality Trust.



Hotel revenue flat, backed by fixed rent

  • Hotel revenue remained flat y-o-y and q-o-q in 3Q21 and contributed to ~69% of 9M21 revenue, backed by fixed rental from its master leases. Occupancy rose to 79.2% for 3Q21, from 77.6% in 1H21; while demand from firms to house their Malaysian workers eased off, government contracts for six of its 11 hotels remained in place and were extended to Feb 2022.
  • RevPAR improved slightly to S$52 (from S$51 in 1H21), with ADRs stable at S$66.
  • Management is seeing encouraging numbers at its managed hotels due to the VTL, and we see RevPAR visibility strengthening in FY22.


Serviced Residences lower, with growth in long-stays

  • Far East Hospitality Trusts Serviced Residences revenue fell further long-stay demand in FY22, along with the gradual expansion in VTLs.


Capital recycling ahead of acquisitions






Chua Su Tye Maybank Kim Eng Research | https://www.maybank-ke.com.sg/ 2021-10-29
SGX Stock Analyst Report BUY MAINTAIN BUY 0.700 SAME 0.700



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