Far East Hospitality Trust (FEHT) reported 1Q14 DPS of 1.30 S cents, down 5.8%, but came in within our expectations. For the quarter, FEHT saw the average occupancy of its hotel portfolio dip 2.1ppt YoY to 83.4%. Management disclosed that Jan was especially weak, due in part to the general weakness in the upscale and mid-tier hotel segments and also the presence of two holidays in the month. Consequently, RevPAR saw a slight decline of 1.3% to S$159 in 1Q. For the serviced residence portfolio, an increase of 1.2% in RevPAU to S$221 was achieved, thanks to higher occupancy of 87.3% which offset a 2.0% fall in average daily rate. Looking ahead, management continued to caution that the operating landscape remains competitive in the near term. However, with the expected completion of the refurbishment works at several of FEHT’s hotels in 2H14, we believe the room rates and competitive edge of the properties will be enhanced. We maintain HOLD on FEHT with a revised fair value of S$0.90.
1Q14 results within expectations
Far East Hospitality Trust (FEHT) reported its 1Q14 results this morning. NPI of S$27.6m was 6.3% higher YoY, while distributable income came in 4.5% higher at S$23.1m. We note that the better performance was mainly due to the new income stream from Rendezvous Hotel Singapore (RHS), which was acquired on 1 Aug 2013. DPS, on the other hand, was down 5.8% YoY to 1.30 S cents, but this is expected because of the enlarged stapled security base following the issue of new securities to part finance the RHS acquisition. For the quarter, DPU made up 23.4%/22.8% of our/consensus full-year forecast. This is in line with expectations given that 1Q is the seasonally weaker quarter.
Details on segmental performance
FEHT saw the average occupancy of its hotel portfolio dip 2.1ppt YoY to 83.4% in 1Q14. Management disclosed that Jan was especially weak, due in part to the general weakness in the upscale and mid-tier hotel segments and also the presence of two holidays in the month. However, the Singapore Airshow in Feb has provided a boost to demand, thereby pushing the average daily rate up 1.2%. Consequently, RevPAR saw a slight decline of 1.3% to S$159 in 1Q. For the serviced residence portfolio, an increase of 1.2% in RevPAU to S$221 was achieved, thanks to higher occupancy of 87.3% which offset a 2.0% fall in average daily rate. The star performer was the retail and office space, raking up 23.6% growth in rental revenue (18.7% contribution to gross revenue).
Maintain HOLD; fair value raised
Looking ahead, management continued to caution that the operating landscape remains competitive in the near term due to restraint in business travel budgets and concentration of hotel room supply within the mid-tier and upscale space. The stronger SGD, which cast a pall for travel originating from Malaysia, India and China in 1Q, may also persist. However, with the expected completion of the refurbishment works at several of FEHT’s hotels in 2H14, we believe the room rates and competitive edge of the properties will be enhanced. We now raise our fair value to S$0.90 from S$0.78 after adjusting our assumptions for the results and rolling our valuation to FY14. Maintain HOLD as FEHT appears fairly priced.
Far East Hospitality Trust (FEHT) reported its 1Q14 results this morning. NPI of S$27.6m was 6.3% higher YoY, while distributable income came in 4.5% higher at S$23.1m. We note that the better performance was mainly due to the new income stream from Rendezvous Hotel Singapore (RHS), which was acquired on 1 Aug 2013. DPS, on the other hand, was down 5.8% YoY to 1.30 S cents, but this is expected because of the enlarged stapled security base following the issue of new securities to part finance the RHS acquisition. For the quarter, DPU made up 23.4%/22.8% of our/consensus full-year forecast. This is in line with expectations given that 1Q is the seasonally weaker quarter.
Details on segmental performance
FEHT saw the average occupancy of its hotel portfolio dip 2.1ppt YoY to 83.4% in 1Q14. Management disclosed that Jan was especially weak, due in part to the general weakness in the upscale and mid-tier hotel segments and also the presence of two holidays in the month. However, the Singapore Airshow in Feb has provided a boost to demand, thereby pushing the average daily rate up 1.2%. Consequently, RevPAR saw a slight decline of 1.3% to S$159 in 1Q. For the serviced residence portfolio, an increase of 1.2% in RevPAU to S$221 was achieved, thanks to higher occupancy of 87.3% which offset a 2.0% fall in average daily rate. The star performer was the retail and office space, raking up 23.6% growth in rental revenue (18.7% contribution to gross revenue).
Maintain HOLD; fair value raised
Looking ahead, management continued to caution that the operating landscape remains competitive in the near term due to restraint in business travel budgets and concentration of hotel room supply within the mid-tier and upscale space. The stronger SGD, which cast a pall for travel originating from Malaysia, India and China in 1Q, may also persist. However, with the expected completion of the refurbishment works at several of FEHT’s hotels in 2H14, we believe the room rates and competitive edge of the properties will be enhanced. We now raise our fair value to S$0.90 from S$0.78 after adjusting our assumptions for the results and rolling our valuation to FY14. Maintain HOLD as FEHT appears fairly priced.
No comments:
Post a Comment