Frasers Hospitality Trust - Maybank Research 2022-05-03: RevPAR Tracking In Line

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FRASERS HOSPITALITY TRUST (SGX:ACV)

Frasers Hospitality Trust - RevPAR Tracking In Line

Expect stronger 2H22; valuation stretched; HOLD

• Frasers Hospitality Trust (SGX:ACV)'s 1H22 DPU was +> 100% y-o-y/-13% h-o-h, and ~35% of our FY22 forecast. All markets saw GOR (gross operating revenue) increase y-o-y, and (except for Malaysia) also positive and better GOP (gross operating profit).
• Sector fundamentals are improving, with reopening borders offering tailwinds to demand recovery.
• Frasers Hospitality Trust boasts a strong balance sheet with 2.2% borrowing cost, and a 50bps rise in rates could lower DPU by ~2%. Acquisition prospects are low in our view, with weaker visibility on RevPAR recovery.

Better Singapore RevPAR visibility in FY23

• Frasers Hospitality Trust's Singapore portfolio saw GOR rise ~9% y-o-y/8% h-o-h in 1H22, while GOP jumped ~23% y-o-y/6% h-o-h. They were driven by better RevPAR, which rose ~15% y-o-y/7% h-o-h to S$137, as the Intercontinental reopened after serving the government’s isolation contracts from Oct-Dec 2021. Singapore’s full relaxation should help strengthen RevPAR in 2H22, and we maintain our estimates at +25% y-o-y.
• We expect visibility to improve in FY23, as recovery gains momentum, with a lift from corporate travel.

UK leading overseas recovery, Australia falls

• RevPAR for Frasers Hospitality Trust's Australia portfolio fell ~7% y-o-y/48% h-o-h, with a tapering of the government’s quarantine business from Dec 2021, and demand hurt by the Omicron surge in Jan-Feb 2022. We see improving RevPAR, with the exit of lockdowns and firm forward bookings. Occupancy in the UK rose to 60.6% (from 16.8%/39.4% in 1H21/2H21), while RevPAR jumped >100% y-o-y/65% h-o-h.
• We expect RevPAR recovery to gain traction in 2H22, from rising leisure demand and resumption of corporate travel.

Sofitel Sydney sale bolsters balance sheet

• The Sofitel Sydney Wentworth divestment, completed on 29 surge in Frasers Hospitality Trust's share price suggests a poor risk-reward at 3.5% FY23 DPU yield and we stay at HOLD.
• We prefer Ascott Residence Trust (SGX:HMN) for its more diversified portfolio, concentrated long-stay assets and upside from capital distributions amid uneven RevPAR recovery.
• See
  • Frasers Hospitality Trust's Share Price,
  • Frasers Hospitality Trust's Target Price,
  • Frasers Hospitality Trust's Analyst Reports,
  • Frasers Hospitality Trust's Dividend History,
  • Frasers Hospitality Trust's Announcements,
  • Frasers Hospitality Trust's Latest News.

Chua Su Tye Maybank Research | https://www.maybank-ke.com.sg/ 2022-05-03

SGX Stock Analyst Report HOLD MAINTAIN HOLD 0.500 SAME 0.500