Tuesday, July 30, 2013

CDL Hospitality Trusts: 2Q13 results miss street's expectations (OCBC)

CDL Hospitality Trusts:
Fair value S$1.73
add: 12m dividend forecast S$0.104
versus: Current price S$1.675

2Q13 results miss street's expectations
• 2Q13 SG hotels RevPAR down 8.5% YoY
• Boost from Angsana Velavaru acquisition
• Maintain HOLD

CDL Hospitality Trusts reported a 4.4% YoY fall in net property income in 2Q13 to S$32.6m. Income available for distribution contracted 6.4% YoY to S$29.4m. 2Q13 RevPAR for the Singapore hotels fell 8.5% YoY to S$193, affected by increased competition, weaker corporate demand and the absence of the biennial Food & Hotel Asia event in Apr.
The results were in line with our expectations, but missed the street’s. Estimating the financial effect of the planned closure of most of the Orchard Hotel Shopping Arcade for AEI (excluding the Galleria) from late 2013, and adjusting our assumptions for the non-Singapore hotels, our FY13F DPU falls to 10.4 S cents from 10.9 S cents. Incorporating a risk-free rate of 2.5% (versus 2.2% previously) into our model, our FV drops to S$1.73 from S$1.79. We maintain a HOLD rating on CDLHT.

Misses street's expectations
CDL Hospitality Trusts reported a 2.9% YoY decline in 2Q13 gross revenue to S$35.6m and a 4.4% YoY fall in net property income to S$32.6m. Income available for distribution contracted 6.4% YoY to S$29.4m. The results were in line with our expectations, with 1H13 DPU of 5.41 S cents forming 50% of our prior FY13 estimate. 2Q13 results missed the street’s expectations with 1H13 DPU forming only 47% of the mean FY13 estimate.

Weak quarter from SG as expected
The weak performance was chiefly due to lower gross revenue from the Singapore hotels, which was mitigated by a S$1.9m revenue boost from Angsana Velavaru (Maldives), which was acquired in Jan 2013. 2Q13 RevPAR for the Singapore hotels fell 8.5% YoY to S$193, affected by increased competition, weaker corporate demand, the absence of the biennial Food & Hotel Asia event in Apr, and a mild impact from the haze. Contribution from the Australian hotels in Brisbane and Perth was slightly lower YoY, affected by the slowing Australian economy and a weaker AUD.

Reducing FY13 RevPAR growth assumption
We understand from management that the performance of CDLHT’s Singapore hotels in July was still weak, although numbers a bit firmer for Aug and Sep. Our checks suggest a similar trend for the overall industry. However, we remain concerned about a mild oversupply situation, with expectations that hotel room supply will grow at 5.8% p.a. from 2013 to 2015, while room demand will only grow at 5.4% over the same period.

New FV of S$1.73
Estimating the financial effect of the planned closure of most of the Orchard Hotel Shopping Arcade for AEI (the Galleria will be kept open) from late 2013, and adjusting our assumptions for the non-Singapore hotels, our FY13F DPU falls to 10.4 S cents from 10.9 S cents. Incorporating a risk-free rate of 2.5% (versus 2.2% previously) into our model, our FV drops to S$1.73 from S$1.79. We maintain a HOLD rating on CDLHT.


Source/Extract/Excerpts/来源/转贴/摘录: OCBC-Research,
Publish date: 29/07/13

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