Date of Report

October 30, 2024

Broker Name

Maybank Research Pte Ltd

Overview

CDL Hospitality Trusts (CDREIT SP) is Singapore’s first listed hospitality group, managing a diverse portfolio of income-producing real estate primarily used for hospitality, lodging, and student accommodation.

Financial Performance

• 3Q NPI (Net Property Income): SGD 36.3 million, a decrease of 6.8% YoY.
• 3Q Revenue: SGD 67.5 million, a decrease of 3.7% YoY.
• 9M Revenue: SGD 194.8 million, an increase of 2.9% YoY.
• 9M NPI: SGD 102.9 million, an increase of 1.0% YoY.

Market Performance

• RevPAR (Revenue Per Available Room):
  • Singapore: SGD 214, down 10.3% YoY due to lower room rates.
  • UK: Flat RevPAR, influenced by better corporate demand.
  • Germany: Increased by 12.4% due to events.
  • Australia and Japan: Showed strong RevPAR and NPI growth.

Growth Drivers

• The recovery in visitor arrivals to pre-pandemic levels.
• Lower borrowing expenses anticipated from projected interest rate cuts.
• Contributions from a build-to-rent project.

Valuation Metrics

• Current Share Price: SGD 0.93
• 12-Month Price Target: SGD 1.10 (+25% upside)
• Gearing Ratio: 38.8%
• Debt Cost: Increased by 20bps to 4.4%.

Shareholder Insights

• Major shareholders include City Developments Ltd.
• A diversified portfolio of 19 properties valued at SGD 2.9 billion, including 4,821 rooms and a mall.

Recent Developments

• The company is focused on smaller acquisitions in high-yielding tertiary markets.
• The financial metrics indicate that while growth in demand has slowed, there are still upside opportunities in the market.

Risk Factors

• Potential increases in hotel room supply without matching demand growth.
• Global macroeconomic downturns affecting RevPAR.
• Volatility in foreign exchange rates impacting earnings.

Analyst Recommendations

• Maintain a “BUY” rating.
• Adjusted FY24 and FY25E DPU (Distribution Per Unit) by approximately 3%, with a lower target price of SGD 1.10, reflecting a total return expectation of 25%.