Monday, 28 April 2014

CDL Hospitality Trusts

Kim Eng on 28 Apr 2014

  • Singapore Airshow boosted 1Q14 occupancy by 1.2ppt YoY and RevPAR by 0.5% YoY; 2H14 should benefit from opening of Sports Hub and hosting of more world-class events.
  • Maldives resorts did better than expected, contributing 12% of 1Q14 NPI; DPU raised by 2.5% to reflect this.
  • TP raised to SGD1.91 (from SGD1.75); reiterate BUY.
Results in line with expectations
CDLHT posted a 15.3% YoY rise in 1Q14 revenue to SGD43.8m, bolstered by its Maldives resort acquisitions. Revenue would have been higher were it not for the weaker trading performance of its Australian hotels and partial closure of Mercure Brisbane for refurbishment. DPU rose 2.2% YoY to 2.75 SGD cts. With the return of the biennial Singapore Airshow in February, CDLHT’s Singapore hotels saw 1Q14 occupancy improved by a modest 1.2ppt YoY to 88.2% and RevPAR edged up 0.5% YoY to SGD192. Balance sheet remained strong with a low gearing of 29.9%, with 21% due for refinancing in 2014 and 36% in 2015.

Maldives resorts post stellar performance
CDLHT expects another 2,000 hotel rooms to be added during the remainder of 2014 (2013: 3,357). This should provide some relief to hoteliers. The opening of the Sport Hubs in June and the hosting of events such as World Club 10s Rugby in the same month and Women’s Tennis Association Championships in October would also add to the attractiveness of Singapore’s MICE infrastructure. The Maldives resorts, acquired last year, delivered stellar performance in 1Q14. Despite making up just 8% of CDLHT’s asset value as of end-Dec 2013, they contributed 12% of 1Q14 NPI and 20% of revenue. Visitor arrivals to Maldives registered strong growth of 11.6% YoY for the first two months of the year. As Chinese outbound travel to the island nation continues to grow, CDLHT can expect to benefit from rising Asian affluence. We adjust our FY14E-16E DPU by close to 3% on better-than-expected performance from Maldives. Reiterate BUY with a higher DDM-derived TP of SGD1.91.

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