Highlights

Simons Trading Research

Author: simonsg   |   Latest post: Fri, 13 Dec 2019, 4:31 PM

 

CDL Hospitality Trusts - Looking Forward to a Stronger 2H19F

Author:   |    Publish date:


  • We do not expect a strong turnaround in 2Q due to weak tourist arrivals, renovation in Orchard hotel and opening expenses for Raffles Maldives.
  • FY19-21F DPU cut by 3-6% to factor in weaker RevPAR from Singapore and higher pre-opening expenses in Maldives.
  • Maintain ADD. Expect better 2H mainly due to the completion of Orchard Hotel renovation. CDL Hospitality Trusts is our preferred stock in the hospitality subsector.

Expect a Weak 2QFY19F

  • Recall that CDL HOSPITALITY TRUSTS (SGX:J85)’s 1QFY19 Singapore revenue per available room (RevPAR) declined 2.4% y-o-y due to room closures in Orchard Hotel for renovation as well as the absence of the biennial Singapore Airshow and a series of events in conjunction with Singapore’s ASEAN Chairmanship in 2018.
  • We do not expect a strong RevPAR turnaround in 2QFY19F given Singapore's weak tourist arrivals. 56% of CDL Hospitality Trusts’s FY18 net property income (NPI) was derived from its Singapore hotel.
  • In addition, Orchard Hotel was still under renovation in 2QFY19 while Raffles Maldives likely incurred opening expenses as it ramped up its operation in phases in 2Q.
  • Continuous AU$, NZ$ and £ weakness during 2Q y-o-y would also drag on earnings.
  • CDL Hospitality Trusts was also negatively impacted by the Trump-Kim Summit in Singapore last year. The absence of such event this year should provide some relief.

Looking Forward to a Better 2H19F

  • Orchard full completion by 3QFY19. We expect this Singapore RevPAR. The hotel opening of some rooms would help to absorb some of the losses. Raffles Maldives’ land villas had a soft opening in 2Q19 while the over-water villas will open later this year.
  • The completion of the lobby of The Lowry Hotel in Manchester in May 2019, will also help to lift earnings.
  • Considering the above factors, we expect stronger 2H19F results as long as tourist arrivals to Singapore stay stable.

Maintain ADD on CDLHT

  • We trim Raffles Maldives.
  • We maintain our ADD call on CDL Hospitality Trusts. We believe the market has environment. Rerating catalysts include performance.
  • CDL Hospitality Trusts remains as our preferred stock in the hospitality subsector. It is the bellwether stock of the hospitality REIT in Singapore.

Source: CGS-CIMB Research - 24 Jul 2019

Share this
Labels: CDL HTrust

Related Stocks

Chart Stock Name Last Change Volume 
CDL HTrust 1.61 +0.01 (0.63%) 1,840 

  Be the first to like this.
 


 

124  142  160  677 

ActiveGainersLosers
Top 10 Active Counters
 NameLastChange 
 Rex Intl 0.188+0.002 
 SunMoonFood 0.051+0.011 
 TEE Intl 0.058+0.003 
 YZJ Shipbldg SGD 1.10-0.03 
 Golden Agri-Res 0.215-0.005 
 Tritech 0.025+0.001 
 Interra Resou.. 0.065+0.004 
 Singapore-eDev 0.045+0.005 
 CapitaMall Trust 2.41-0.01 
 AusGroup^ 0.032-0.001 
Partners & Brokers