CDL H-Trust – OCBC

SOLID SET OF RESULTS

•Good 1Q12 results

•Record Singapore hotel performance

•Tourism attractions coming up

Solid 1Q12

For 1Q12 ended Mar 2012, CDLHT recorded a 19% YoY in gross revenue of S$38.4m. The increase was from strong organic growth, maiden 1Q contribution of S$2.7m from Studio M Hotel, and the receipt of a full-year’s variable income of S$1.8m versus S$0.84m recognised for an 8-month period in 1Q11 for Australia hotels. Net property income grew 20% YoY to S$36.0m. Total return for the period climbed 24% to S$28.6m. After deducting income retained for working capital, income available for distribution per security climbed 17% YoY to a 1Q record of 2.78 S-cents, which translates into an annualised DPU yield of 6.0% based on yesterday’s close of S$1.87. The results were in-line with our forecasts.

Record numbers for Singapore hotels

Excluding Studio M Hotel, which was acquired in May 2011, Singapore hotels saw RevPAR grow 9.3% YoY to S$213, the highest 1Q RevPAR since the inception of CDLHT. Average occupancy grew by 2.7 ppt from the corresponding period last year to a 1Q record of 88.5%. Average daily rate grew by 6.2% YoY to S$241. For Novotel Singapore Clarke Quay, an upgrade of the bathrooms and room touch-ups for the remaining 44 guest rooms was completed in mid Jan 2012. The Australia hotels continued a strong performance, boosted by a buoyant natural resources sector and a static supply of hotel rooms.

Exciting year for tourism

Upcoming attractions of note include Phase One (Bay South) of the 101-hectare Gardens by the Bay, the River Safari (Asia’s first riverthemed wildlife park) and the Marine Life Park at Resorts World Sentosa. We believe that they will continue to enhance the experience of tourists. While the supply of new hotel rooms in Singapore is expected to grow by 3.1% YoY according to Howard HTL, we believe that demand growth will outstrip supply growth.

Maintain BUY

We maintain our BUY rating on CDLHT and our RNAV-derived fair value estimate of S$2.04.