Tuesday 30 April 2013

CDL Hospitality Trusts

OCBC on 29 Apr 2013

CDLHT reported 1Q13 revenue of S$37.9m, down 1.3% YoY. Lower gross revenue from the Singapore hotels was partially offset by higher revenue from the overseas properties. Net property income fell 2.1% to S$35.3m. Total return for the period dipped 0.7% YoY to S$28.4m. 1Q13 DPU of 2.69 S cents fell slightly short of expectations, forming 23.0% and 22.6% of ours and consensus FY13F estimates respectively. RevPAR for CDLHT's Singapore hotels fell 7.9% YoY to S$191 on the back of 1.2ppt drop in occupancy to 87.0% and a 6.8% drop in average room rate to S$219. We are lowering our FY13 RevPAR growth assumption for CDLHT's Singapore hotels from 3.2% to 0% and cut our RNAV-based fair value for CDLHT from S$2.11 to S$2.05. We maintain our HOLD rating on CDLHT.

1Q13 misses expectations 
CDLHT reported 1Q13 revenue of S$37.9m, down 1.3% YoY. Lower gross revenue from the Singapore hotels was partially offset by higher revenue from the overseas properties. Net property income fell 2.1% to S$35.3m. Total return for the period dipped 0.7% YoY to S$28.4m. 1Q13 DPU of 2.69 S cents fell slightly short of expectations, forming 23.0% and 22.6% of ours and consensus FY13F estimates respectively. 

Weak Singapore performance
RevPAR for CDLHT's Singapore hotels fell 7.9% YoY to S$191 on the back of 1.2ppt drop in occupancy to 87.0% and a 6.8% drop in average room rate to S$219. Management attributed the weak performance to the absence of the biennial Singapore Airshow, Chinese New Year falling in Feb instead of Jan, which disrupted corporate travel. There was softer demand for meetings and conferences with tighter spending on corporate travel. Management also acknowledges that competition in Singapore is increasing with a growing supply of hotel rooms, e.g. a large increase of 8.6% in hotel room supply is expected this year. 

Maiden contribution from Angsana Velavaru 
Angsana Velavaru contributed S$1.2m in gross revenue for the first two months after its acquisition. The resort registering a year-on-year RevPAR growth of 28.5% or US$105 to US$474 for the two months ended 31 Mar 2013. With gearing at 28.3% as of 31 Mar 2013, CDLHT remains on the lookout for acquisition opportunities in the next 12 months. 

Maintain HOLD
While we have been cautious on the local hospitality sector since Dec, industry data and data from corporates has been weaker than what we anticipated. We are lowering our FY13 RevPAR growth assumption for CDLHT's Singapore hotels from 3.2% to 0% and cut our RNAV-based fair value for CDLHT from S$2.11 to S$2.05. We maintain our HOLD rating on CDLHT.

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