CDL Hospitality Trusts (CDLHT) reported its 4Q14 results which were in-line with the street’s expectations. Gross revenue and DPU rose 14.4% and 7.2% YoY to S$45.1m and 3.13 S cents, respectively, underpinned by the recognition of a full quarter's hotel revenue from Jumeirah Dhevanafushi. We expect market conditions to remain challenging in the near future, given the uncertain macroeconomic landscape. We believe the situation is further exacerbated by the weak Euro and Japanese Yen, which have drawn tourist arrivals to those areas. Looking ahead, CDLHT will continue to focus on finding suitable acquisition opportunities in the sector. It has sufficient debt headroom of S$339m to finance prospective acquisitions before reaching the 40% gearing level. Following a change in analyst coverage, we fine-tune our assumptions and derive a new fair value estimate of S$1.76 (previously S$1.80), based on our dividend discount model (discount rate: 8.4%, terminal growth rate: 2%). Maintain HOLD.
4Q14 results met the street’s expectations
CDL Hospitality Trusts (CDLHT) reported its 4Q14 results which were in-line with the street’s expectations. Gross revenue and DPU rose 14.4% and 7.2% YoY to S$45.1m and 3.13 S cents, respectively, underpinned by the recognition of a full quarter's hotel revenue from Jumeirah Dhevanafushi amounting to S$5.4m. FY14 gross revenue came in at S$166.8m (+12.1%), while DPU was flat at 10.98 S cents (+0.1%). This formed 103.1% and 99.8% of Bloomberg consensus’ projections, respectively.
Market conditions still challenging
Although CDLHT managed to record a 3 ppt growth in its Singapore hotels’ occupancy to 90% in 4Q14, competitive pressures from higher supply of hotel rooms and a cautious corporate spending environment resulted in a 4.7% decline in its average room rate to S$205. Hence RevPAR was down 1.1% to S$185. For FY14, CDLHT’s Singapore hotels saw a 1.6% dip in RevPAR to S$188. We expect market conditions to remain challenging in the near future, given the uncertain macroeconomic landscape. We believe the situation is further exacerbated by the weak Euro and Japanese Yen, which have drawn tourist arrivals to those areas. There is also an expected addition of 3,258 hotel rooms (+5.7%) to the Singapore market in 2015, and this would exert more pressure on room rates.
Maintain HOLD
Looking ahead, CDLHT will continue to focus on finding suitable acquisition opportunities in the hospitality sector, with Japan and Singapore being the key areas of interest. Its healthy gearing ratio of 31.7% (as at 31 Dec 2014) implies that it has sufficient debt headroom of S$339m to finance prospective acquisitions before reaching the 40% gearing level. Following a change in analyst coverage, we fine-tune our assumptions and derive a new fair value estimate of S$1.76 (previously S$1.80), based on our dividend discount model (discount rate: 8.4%, terminal growth rate: 2%). Maintain HOLD.
CDL Hospitality Trusts (CDLHT) reported its 4Q14 results which were in-line with the street’s expectations. Gross revenue and DPU rose 14.4% and 7.2% YoY to S$45.1m and 3.13 S cents, respectively, underpinned by the recognition of a full quarter's hotel revenue from Jumeirah Dhevanafushi amounting to S$5.4m. FY14 gross revenue came in at S$166.8m (+12.1%), while DPU was flat at 10.98 S cents (+0.1%). This formed 103.1% and 99.8% of Bloomberg consensus’ projections, respectively.
Market conditions still challenging
Although CDLHT managed to record a 3 ppt growth in its Singapore hotels’ occupancy to 90% in 4Q14, competitive pressures from higher supply of hotel rooms and a cautious corporate spending environment resulted in a 4.7% decline in its average room rate to S$205. Hence RevPAR was down 1.1% to S$185. For FY14, CDLHT’s Singapore hotels saw a 1.6% dip in RevPAR to S$188. We expect market conditions to remain challenging in the near future, given the uncertain macroeconomic landscape. We believe the situation is further exacerbated by the weak Euro and Japanese Yen, which have drawn tourist arrivals to those areas. There is also an expected addition of 3,258 hotel rooms (+5.7%) to the Singapore market in 2015, and this would exert more pressure on room rates.
Maintain HOLD
Looking ahead, CDLHT will continue to focus on finding suitable acquisition opportunities in the hospitality sector, with Japan and Singapore being the key areas of interest. Its healthy gearing ratio of 31.7% (as at 31 Dec 2014) implies that it has sufficient debt headroom of S$339m to finance prospective acquisitions before reaching the 40% gearing level. Following a change in analyst coverage, we fine-tune our assumptions and derive a new fair value estimate of S$1.76 (previously S$1.80), based on our dividend discount model (discount rate: 8.4%, terminal growth rate: 2%). Maintain HOLD.
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