CDLHTrust – UOBKH
2QFY08: DPU up 43.6% yoy to 3.03 S cents; RevPAR grows 31% yoy
CDL Hospitality Trust (CD REIT) reported yoy revenue and net property income (NPI) growth of 42.4% and 41.7% to S$29.5m and S$27.7m respectively in 2QFY08. DPU of 3.03 S cents was 43.6% higher yoy.
Strong top-line growth. Net property income surged 41.7% yoy to S$27.7m on the back of 42.4% yoy revenue growth. This was mainly driven by organic growth from Revenue Per Available Room (RevPAR).
Singapore – still a strong growth engine; outperforming industry. Both the New Zealand and Singapore markets saw double-digit RevPAR growth. Again, the Singapore market delivered an impressive RevPAR growth of 31% to S$222, contributed by a strong average occupancy rate (AOR, +1.1 ppt higher yoy to 87.1%) and average daily rate (ADR, +29% higher yoy to S$255). CD REIT’s five Singapore hotels are outperforming the industry which saw a 1-5 ppt drop in AOR rate despite 20-30% yoy ADR growth in the period. This is in line with our view that business travel, which CD REIT mainly targets, is more resilient than leisure travel to inflation. Management indicated that even in Jun 08, when Singapore saw a dip in tourist arrivals, the REIT’s portfolio still enjoyed a laudable 87% occupancy rate.
Low gearing ratio of 20.3%. CD REIT has minimal debt obligation (S$24m) that needs to be refinanced in FY08. The ample debt capacity provides a headroom of about S$400m for acquisitions, assuming 45% optimal gearing ratio (D/A).
DPU in line with forecast. 2QFY08 DPU of 3.03 S cents (43.6% higher yoy), coupled with DPU of 2.86 S Cents in 1QFY08, accounted for 55% of our full-year DPU forecast. The annualised 1HFY08 DPU is slightly ahead of our forecast and market consensus.
Outlook. Management guided that the forward booking in July remained strong and expected growth in 3QFY09 on a yoy basis. The REIT is still exploring opportunities for acquisitions. We agree with management that more opportunities could emerge as cap rates are generally higher now than before the US sub-prime crisis.