CDL H-Trust : DBS

Comment on Results
In line with our expectations, CDL HT’s annualised DPU of 6.35 cents was above our forecast. Annualised gross revenue and net property income were comparable with our expectation. The net income levels were above our expectation due to extra income from initial recognition of non- current rental deposits. Average occupancy rate was 86% with the average daily rate of S$166, a 7.1% increase from forecast and RevPAR of S$143, an increase of 10.9% from forecast. Current gearing level for the trusts is at 34.7%

Outlook
Going forward, we expect strong growth in their Singapore portfolio with an expected 15% increase in room rates in 2007. The recent acquisition of Auckland property will start to contribute to the revenue. The trust is keen to expand both locally as well as overseas with focus on countries with high growth for acquisitions, including China, India, Vietnam, and the United Arab Emirates. Potentially, they may have 40% of their portfolio overseas, up from 10% currently.

Recommendation
With the strong fundamentals in both Singapore and New Zealand markets, continued increase in revenue with various asset enhancement and plans to double their portfolio in three years, we see the Trusts as one of the S-REITs that will continue to perform well in 2007. We roll forward our DCF to 2007 and revised our TP to S$2.05 backed by our DCF calculations. Maintain BUY