CapitaLand Ascott Trust (CLAS)

CapitaLand Ascott Trust (CLAS) showed an impressive performance in 2H 2024 with an 8% year-on-year (y-o-y) growth in gross profit, reaching S\$198.0 million. Revenue increased by 6% y-o-y to S\$423.2 million, driven by stronger operating performance, contributions from new acquisitions, and properties completing asset enhancement initiatives (AEI). These factors mitigated challenges such as foreign exchange impacts and higher financing costs.

On a same-store basis, both gross profit and revenue increased by 4% y-o-y. Revenue per available unit (REVPAU) for 2H 2024 rose by 6% to S\$167, surpassing pre-pandemic levels at 113% of 4Q 2019 pro forma REVPAU. This growth was attributed to higher average daily rates and an improved occupancy rate of 81%, compared to 77% in 4Q 2023. Japan led with a 37% y-o-y increase, while Australia, Singapore, and the UK achieved double-digit growth.

CLAS maintained a balanced income mix in 2H 2024, with 62% of total income from stable assets and 38% from growth assets. The core distribution per stapled security (DPS) increased by 3% y-o-y to 3.08 cents, with a total DPS for 2H 2024 reaching 3.55 cents. CLAS also achieved a 5% y-o-y increase in total core distribution to S\$117.0 million.

With a market capitalization of S\$3.3 billion, CLAS trades at 0.8x book value and offers a 6.3% yield. The consensus target price is S\$1.08, implying a 23% upside. Lim & Tan Securities maintains an “Accumulate” rating for CLAS, citing attractive valuations, a diversified portfolio, and strong parentage.

CDL Hospitality Trusts (CDLHT)

CDL Hospitality Trusts reported a mixed performance for FY 2024. In 2H 2024, gross revenue declined by 3.9% y-o-y to S\$132.9 million, while net property income (NPI) decreased by 9.0% y-o-y to S\$68.7 million. The decline was attributed to normalizing demand in some markets after extraordinary post-pandemic growth. RevPAR growth was observed in most portfolio markets except Singapore and New Zealand.

Total distribution to stapled securityholders for 2H 2024 fell by 10.9% y-o-y to S\$35.4 million, with DPS decreasing by 11.9% to 2.81 cents. The distribution was impacted by higher interest costs, lower NPI, and the absence of a one-off capital distribution of S\$0.9 million recognized in 2H 2023. For the full year, gross revenue increased modestly by 1.0% to S\$135.2 million, while NPI decreased by 2.2% y-o-y.

CDLHT undertook several asset enhancement initiatives in 2024, including ballroom renovations and room refurbishments at the Grand Millennium Auckland. These efforts aim to capitalize on rising demand, particularly with the opening of the New Zealand International Convention Centre in 2H 2025.

As of December 31, 2024, CDLHT’s total portfolio value increased by 4.6% y-o-y to S\$3.3 billion. Despite higher interest costs, CDLHT remains committed to expanding its diversified portfolio, as evidenced by acquisitions like Hotel Indigo Exeter and Benson Yard. With a market cap of S\$1.1 billion, CDLHT trades at 20x forward PE and 0.6x PB, offering a 6.2% dividend yield. The consensus target price is S\$1.00, representing a 16% upside. Lim & Tan Securities maintains a “Hold” recommendation for CDLHT due to its decent dividend yield and ongoing challenges.

Macro Market News and Trends

The global economy remains influenced by cycles of financial conditions and growth. In the United States, stronger-than-expected labor market data in December 2024 showed payrolls rising by 256,000, with unemployment and underemployment rates decreasing to 4.1% and 7.5%, respectively. Wage growth remained flat at 3.9% y/y. However, tighter financial conditions, driven by a 10-year Treasury yield above 4.5%, continue to pose challenges for equities.

In Hong Kong, the luxury real estate market is under pressure, with prices falling to an eight-year low. A luxury mansion at 15 Gough Hill Road, once owned by Chinese tycoon Chen Hongtian, has seen its price slashed by 60% to HK\$700-800 million, reflecting weak demand and economic slowdown in neighboring China.

Share Transactions and Dividends

Notable acquisitions and disposals in January 2025 include transactions by Travelite Holdings Ltd, Golden Agri Resources Ltd, and Indofood Agri Resources Ltd. Share buybacks were also observed, with companies like Singtel, SGX, and ST Engineering actively repurchasing their shares. Dividend distributions from companies like Sabana REIT, Mapletree Logistics Trust, and Suntec REIT were highlighted, offering attractive yields to investors.

Outlook and Recommendations

Lim & Tan Securities advises investors to maintain a defensive stance in global portfolios, favoring government bonds and cash over riskier assets. For individual stocks, the firm recommends accumulating shares of CapitaLand Ascott Trust for its strong operating performance and diversified portfolio. CDL Hospitality Trusts, while offering a decent dividend yield, is rated as a “Hold” due to higher interest costs and weaker results.