CDL H-Trust – Phillip

• 2Q10 revenue of $30.7 million, net property income of $28.7 million, distributable income of $24.1 million

• 2Q10 DPU of 2.57 cents, 1H10 distribution of 4.89 cents

• Maintain Hold, fair value of $1.93

CDL HT recorded 2Q10 revenue of $30.7 million (+51.9 % y-y, +15.4% q-q), net property income of $28.7 million (+49.2% y-y, +16.1% q-q) and distributable income of $24.1 million (+38.7% y-y, +11.6% q-q). $2.41 million was retained for 2Q10 and total income retained in 1H10 was $4.57 million. DPU for the 2Q10 was 2.57 cents (+36.0% y-y, +10.8% q-q). The trust will be paying out 4.89 cents for 1H10. The improved performance was on the back of sustained growth in the tourism sector as well as full quarter contribution from the Australia hotels (acquired in Feb 2010).

The Singapore portfolio experienced a strong performance. Revenue grew 32.7% from a year ago. Improved performance was seen across all the Singapore hotels. Occupancy for the Singapore hotels was 88.5%, up almost 14 percentage points from 1Q09 where the lowest was recorded during the recession. RevPar (Revenue per available room) also rebounded to $195. Revenue from the Orchard Hotel Shopping Arcade was flat, with occupancy rate held steady at 81%. The Australia properties contributed a full quarter revenue of $4.4 million while the New Zealand property accounted for $2.1 million. Percentage breakdown of the gross revenue is Singapore; 78.7%, Australia; 14.4%, New Zealand; 6.9%.

CDL HT raised gross proceeds of $200 million in a private placement earlier this month and $196.5 million was used to repay debt. It now has total debt of $326.4 million with gearing at 18.6%.

CDL HT has benefitted from the rebound in the tourism sector. Tourist arrivals continued to register double-digits growth from a year ago. The increase in tourist arrivals had translated into higher hotel occupancy and RevPar. CDL HT performance is very much in-line with the market statistics. For the 1H10, CDL HT is slightly ahead of the industry average with occupancy rate of 86.4% and RevPar of $185 against the industry’s occupancy and RevPar average of 85% and $174.

We continue to have an optimistic outlook on the tourism sector and think y-y growth will last through the year. We like CDL HT for its positioning in the sector and also its lightened balance sheet which will enable it to capitalize on acquisition opportunities. We adjusted our FY10E revenue and DPU up slight by 1% and 0.6% to reflect the positive outlook. However we think CDL HT is fairly value with the recent run-up in price and we are maintaining our Hold recommendation with fair value of $1.93.