CDLHTrust – UOBKH

3Q07: DPU up 69% than IPO forecast

3Q revenue higher than IPO forecast by 69% to S$24.0m. The initial portfolio of four Singapore hotels registered strong revenue growth ranging from 25% to 41% yoy. Novotel Clarke Quay, acquired in June 07, made its maiden contribution of $3.8m or 16% of total revenue. In tandem with revenue growth, DPU increased 69% to 2.36 cents than IPO forecast, suggesting annualized yield of 3.92%.

RevPAR grew 27.4% to $179 on same-store basis, driven by increase in both occupancy rate and Average Daily Rate (ADR). Singapore welcomed visitor arrival of 7.6m in the first three quarters, 5.3% growth yoy. Due to tight supply of hotel rooms, the Trusts’ Singapore hotel portfolio enjoyed ADR increment of 20%, in line with industry level. Its occupancy rate was also up 7.1 ppt to 89.9%

The largest hotel owner in Singapore, still with room to grow. All CDL REIT’s assets are close to CBD or Orchard Road, which allows it to cater for both leisure and business travelers. High margin corporate business accounted for 77% of total revenue in ytd 07, up from 71% in 06. Boasting 2324 hotel rooms in Singapore, CDL is set to benefit from booming tourism sector in the Lion City. Its gearing remains low at 23%, with $550m debt capacity for asset acquisition given 45% optimal gearing ratio.

Maintain BUY with earning forecast under review.