We believe that CDLHT’s Singapore hotels are best classified as being in the Mid-tier/Upscale range, because their FY12 RevPAR was S$211, close to the mean of S$264 and S$171, which are the RevPAR averages for Singapore Upscale and Mid-tier hotels respectively. As detailed in our hospitality sector report dated 5 Mar 2013, we project that for 2013-2015, the Economy, Mid-tier and Upscale/Luxury categories will grow +5.9% p.a., +8.5% p.a. and +4.4% p.a. respectively. As a group, the Mid-tier/Upscale/Luxury segment will grow 5.8% p.a., the same rate that the overall supply will grow. This rate is lower than the projected room demand of 5.4% p.a. over the same period, indicating that competition is likely to intensify in the segments that CDLHT is represented in. Adjusting our assumptions and removing the 10% discount to RNAV to better reflect the worth of CDLHT’s hotel properties, we are raising our fair value from S$1.93 to S$2.11; but maintain a HOLD rating since CDLHT is trading near our fair value.
STB targets for 2013 are out
In 2012, Singapore registered visitor arrivals of 14.4m (+9.1%) and tourism receipts of S$23b (+3.1%). For 2013, STB is targeting 14.8m-15.5m arrivals (+2.9% to +7.7% YoY) and tourism receipts of S$23.5b-24.5b (+2.2% to +6.5% YoY). The government has noted that the next phase of growth will have to come from increasing the spend per visitor, as opposed to just adding more visitors. However, STB seems to be incorporating slightly lower spend per visitor arrival assumptions for 2013 compared to 2012, based on the implied YoY growth rates of the 2013 targets. We believe that this highlights the challenge of converting arrivals into increased spending, and supports our thesis that the 1H13 outlook for Singapore hospitality is muted.
Blended exposure to Upscale and Mid-tier
We believe that CDLHT’s Singapore hotels are fairly evenly exposed to the Mid-tier and Upscale segments, because their FY12 RevPAR was S$211, close to the mean of S$264 and S$171, which are the RevPAR averages for Singapore Upscale and Mid-tier hotels respectively. As detailed in our hospitality sector report dated 5 Mar 2013, we project that for 2013-2015, the Economy, Mid-tier and Upscale/Luxury categories will grow +5.9% p.a., +8.5% p.a. and +4.4% p.a. respectively. As a group, the Mid-tier/Upscale/Luxury segment will grow 5.8% p.a., the same rate that the overall supply will grow. This rate is lower than the projected room demand of 5.4% p.a., indicating that competition is likely to intensify in the segments that CDLHT is represented in. We also note that 1Q13 results are probably going to be weak due to the lack of the biennial Singapore Airshow and the fact that Chinese New Year is in Feb this year instead of Jan (corporate travel picks up after CNY).
Maintain HOLD
Adjusting our assumptions and removing the 10% discount to RNAV to better reflect the worth of CDLHT’s hotel properties, we are raising our fair value from S$1.93 to S$2.11; but maintain a HOLD rating since CDLHT is trading near our fair value.
In 2012, Singapore registered visitor arrivals of 14.4m (+9.1%) and tourism receipts of S$23b (+3.1%). For 2013, STB is targeting 14.8m-15.5m arrivals (+2.9% to +7.7% YoY) and tourism receipts of S$23.5b-24.5b (+2.2% to +6.5% YoY). The government has noted that the next phase of growth will have to come from increasing the spend per visitor, as opposed to just adding more visitors. However, STB seems to be incorporating slightly lower spend per visitor arrival assumptions for 2013 compared to 2012, based on the implied YoY growth rates of the 2013 targets. We believe that this highlights the challenge of converting arrivals into increased spending, and supports our thesis that the 1H13 outlook for Singapore hospitality is muted.
Blended exposure to Upscale and Mid-tier
We believe that CDLHT’s Singapore hotels are fairly evenly exposed to the Mid-tier and Upscale segments, because their FY12 RevPAR was S$211, close to the mean of S$264 and S$171, which are the RevPAR averages for Singapore Upscale and Mid-tier hotels respectively. As detailed in our hospitality sector report dated 5 Mar 2013, we project that for 2013-2015, the Economy, Mid-tier and Upscale/Luxury categories will grow +5.9% p.a., +8.5% p.a. and +4.4% p.a. respectively. As a group, the Mid-tier/Upscale/Luxury segment will grow 5.8% p.a., the same rate that the overall supply will grow. This rate is lower than the projected room demand of 5.4% p.a., indicating that competition is likely to intensify in the segments that CDLHT is represented in. We also note that 1Q13 results are probably going to be weak due to the lack of the biennial Singapore Airshow and the fact that Chinese New Year is in Feb this year instead of Jan (corporate travel picks up after CNY).
Maintain HOLD
Adjusting our assumptions and removing the 10% discount to RNAV to better reflect the worth of CDLHT’s hotel properties, we are raising our fair value from S$1.93 to S$2.11; but maintain a HOLD rating since CDLHT is trading near our fair value.
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