Frasers Hospitality Trust Financial Analysis: 2H and FY2024

Net Profit Decline Details

Key Facts

The report covers the financial performance of Frasers Hospitality Trust (FHT) for the second half (2H) and full year (FY) 2024, dated 12 November 2024, held at InterContinental Singapore.

Business Description

Frasers Hospitality Trust (FHT) operates a diverse portfolio of hotels and serviced residences across multiple geographies. The business segments include upscale, upper-midscale, luxury, and upper-upscale classes. Major geographic footprints include Singapore, Australia, the United Kingdom, Japan, Malaysia, and Germany.

Industry Position

FHT holds a significant position within the hospitality industry, competing with other major hospitality REITs. Given its diverse portfolio and strategic locations, FHT maintains a competitive edge. Market share details are not explicitly mentioned, but the firm operates in highly competitive markets in key cities.

Revenue Streams and Customer Base

The company’s revenue streams are derived primarily from room rentals, food and beverage services, and other hospitality-related services. Their customer base includes corporate clients, leisure travelers, and group bookings.

Financial Statement Analysis

Income Statement

For FY2024, FHT reported a gross revenue increase of 7.6% year-over-year (YoY) to SGD 132.5 million. However, the net property income (NPI) only saw a modest increase of 2.1% YoY to SGD 92.5 million, due to elevated property taxes and increased property expenses. The distribution per stapled security (DPS) declined by 7.5% YoY to 2.2592 cents.

Balance Sheet

As of 30 September 2024, FHT reported total assets of SGD 2,134.5 million with total borrowings of SGD 741.9 million, leading to a gearing ratio of 34.9%. The portfolio value increased by 2.9% YoY to approximately SGD 2.0 billion.

Cash Flow Statement

The report does not provide detailed cash flow statements. However, it mentions that higher finance costs due to refinancing in a higher interest rate environment have impacted distributions.

Dividend

FHT has proposed a distribution rate of 1.1682 cents per stapled security for 2H FY2024, to be paid on 27 December 2024.

Strengths

• Diverse geographic footprint with strategic locations.
• Increase in gross revenue driven by growth in Europe, Malaysia, and Japan.
• Portfolio value increased by 2.9% YoY.

Risks

• Decline in DPS by 7.5% YoY due to higher finance costs and increased property expenses.
• Competitive pressures in key markets like Singapore and the UK.

Special Activities

Proactive capital management strategies, including opportunistic divestments, yield-accretive acquisitions, and asset enhancement initiatives, are in place to improve profitability.

Investment Recommendations

Current Holders

Investors currently holding FHT stocks should consider holding their position, keeping an eye on management’s efforts to enhance asset value and market conditions.

Potential Investors

New investors should approach with caution due to the recent decline in DPS and competitive market pressures. However, the company’s proactive management strategies may offer future growth opportunities.

Disclaimer

This analysis is based on the financial report provided and does not constitute financial advice. Investors should conduct their own research or consult with a financial advisor before making investment decisions.