Wednesday, November 13, 2013

OUE Hospitality Trust : Key takeaways from post-inaugural results investor luncheon (CS)

OUE Hospitality Trust
Maintain OUTPERFORM
Price (08 Nov 13, S$) 0.88
TP (prev. TP S$) 1.04 (1.04)
Key takeaways from post-inaugural results investor luncheon

Credit Suisse hosted OUEHT's post-inaugural results investor luncheon (results note here) in Singapore. OUEHT was represented by CEO Chong Kee Hiong and CFO Rudi Chuan.

● Key highlights: (1) MOS REVPAR growth was driven by higher Transient customers and higher occupancy; (2) supply is likely to remain an overhang sector-wide, although management believes MOS should have better pricing power post AEIs of its 430 rooms in 2014 and given its prime location; (3) MG is ~100% occupied: healthy rent reversions and tenant sales, especially F&B tenants.


● Near-term acquisitions, if any, will likely be third party as Crowne Plaza Changi Airport's Phase 2 extension works kick off soon. Management said Japan, Indonesia and the Philippines look interesting with more attractive yields, as the bid-ask spread on Singapore assets widens. Gearing is 32% though management plans to get a credit rating to increase their acquisition headroom.

● Maintain OUTPERFORM: At 7.4% FY14E yield, risk-reward looks attractive as prices imply c. 30% decline in FY14's REVPARs (1H13 REVPAR +3.4% to S$252, this period was S$261).

Credit Suisse hosted OUEHT's post-inaugural results investor luncheon (inaugural results note here) in Singapore. OUEHT was represented by CEO, Chong Kee Hiong and CFO, Rudi Chuan.

Key highlights:
(1) Strong REVPAR growth: REVPAR grew 14% YoY to S$261 for the period of 25 July (IPO) to 30 September, beating management's forecast of S$253 by 3.2%. We understand that the REVPAR increase was amongst the highest among the hotels in the Orchard Road area. REVPAR growth was driven by a high occupancy of 90%-plus and increase in business from the Transient segment (which pays better rates than Wholesale segment). This was partly due to higher bookings from its hotel website. Approximately 50% of revenue was contributed by the transient segment in 3Q13 and going forward, management targets 55%. Looking ahead into 2014, OUEHT plans to increase more corporate accounts and RFPs. Corporate customers would be given priority check-ins as a means of value add. Management said corporate rates have not fallen and will be aiming to increase its contribution to 30% of total revenue from the current 24%.

(2) Supply concerns about the hospitality sector: Management believes overall industry players will unlikely increase their rates next year due to supply pressures. That said, they are not too overly concerned about any cannibalisation of their business due to MOS's superior location in the heart of Orchard Road. Management also expects some S$20-30 increase in average room rates post refurbishments of 430 rooms commencing in 2014.

(3) Mandarin Gallery (MG): MG is approximately 100% occupied, with average lease terms of 2.5 years. Management said there was one lease renewal in 3Q13 which has a positive rental reversion. Separately, tenant sales and rents saw positive growth, while its F&B tenants are doing well.

(4) Fund raising exercise: Due to concerns about Fed tapering, investors were worried if the recent capital raising by various REITs could be a sector-wide phenomenon as they raise equity capital in a bid to decrease gearing levels to bring down exposure to rising interest rates. Management does not think there is enough reason to believe that there is a 'panic' in the sector as any equity issuance is generally accompanied by a yield accretive acquisition. OUEHT and other REITs likewise would likely have enough confidence on the impending acquisitions before raising equity. OUEHT will also be looking to get a credit rating to increase their debt headroom to facilitate funding of future acquisitions.

(5) Acquisition outlook: Management views acquisitions in Singapore remains challenging (buyers are being priced out with sellers looking to divest at prices close to 4% cap rate). However, overseas markets such as Japan, Indonesia and the Philippines are looking attractive with their higher yields. OUEHT would consider foreign markets. Management also guided that any potential acquisition from sponsor next year seems unlikely as Crowne Plaza Changi Airport asset will be undergoing AEI (phase 2 of development with a new extension), and any acquisition, if any, would likely be from third party. OUEHT has 32% gearing currently, with 2.2% cost of debt (100% fixed with average tenure of 3 years [50:50 in 2016/2018 expiry]—no refinancing due in 2014/2015).

Maintain OUTPERFORM
OUEHT trades at a 7.4% FY14E yield. We believe the risk-reward looks attractive as we estimate that current prices imply about a 30% decline in FY14's REVPARs when MOS has so far consistently delivered better-than-industry growth (1H13 REVPAR +3.4% to S$252, this period, REVPAR was S$261).







Source/Extract/Excerpts/来源/转贴/摘录: CS-Research,
Publish date: 11/11/13

No comments:

Post a Comment

Warren E. Buffett(沃伦•巴菲特)
Be fearful when others are greedy, and be greedy when others are fearful
别人贪婪时我恐惧, 别人恐惧时我贪婪
投资只需学好两门课: 一,是如何给企业估值,二,是如何看待股市波动
吉姆·罗杰斯(Jim Rogers)
“错过时机”胜于“搞错对象”:不会全军覆没!”
做自己熟悉的事,等到发现大好机会才投钱下去

乔治·索罗斯(George Soros)

“犯错误并没有什么好羞耻的,只有知错不改才是耻辱。”

如果操作过量,即使对市场判断正确,仍会一败涂地。

李驰(中国巴菲特)
高估期间, 卖对, 不卖也对, 买是错的。
低估期间, 买对, 不买也是对, 卖是错的。

Tan Teng Boo


There’s no such thing as defensive stocks.Every stock can be defensive depending on what price you pay for it and what value you get,
冷眼(冯时能)投资概念
“买股票就是买公司的股份,买股份就是与陌生人合股做生意”。
合股做生意,则公司股份的业绩高于一切,而股票的价值决定于盈利。
价值是本,价格是末,故公司比股市重要百倍。
曹仁超-香港股神/港股明灯
1.有智慧,不如趁势
2.止损不止盈
成功者所以成功,是因为不怕失败!失败者所以失败,是失败后不再尝试!
曾淵滄-散户明灯
每逢灾难就是机会,而是在灾难发生时贱价买股票,然后放在一边,耐性地等灾难结束
  • Selected Indexes 52 week range

  • Margin of Safety

    Investment Clock

    World's First Interactive Investment Clock