CDL H-Trust – Phillip

FY10 Results

•4Q10 revenue $33.3m, NPI $31.5m, distributable income $26.6m

•FY10 full year revenue $122.3m, NPI $115.1m, distributable income $92.0m

•4Q10 DPU of 2.78 cents, bringing full year DPU to 10.21 cents.

•Best year since listing, beneficiary of economic recovery

•Maintain Buy recommendation, target price $2.38

2010 was a good year for CDL HT. Full year numbers were very much in-line with our estimates. Revenue came in spot on with our forecast but DPU was 4% higher than our figure. 4Q10 revenue was $33.3 million (+5.4% q-q, +27.5% y-y), net property income was $31.5 million (+4.4% q-q, +27.3% y-y) and distributable income after deducting retained income was $26.6 million (+9.8% q-q, +18.5% y-y). For the full year, revenue came in at $122.3 million (+33.3% y-y), net property income was $115.1 million (+33.2% y-y) and distributable income after deducting retained income was $92.0 million (+28.2% y-y). 4Q10 DPU was 2.78 cents bringing full year DPU to 10.21 cents. The improved y-y performance was on the back of a strong economic recovery that boosted the tourism revenue. This translated into direct benefits for CDL HT. Average occupancy rate for the Singapore hotels was 88.6% (2009: 81.4%), RevPar was $191 (2009: $149). In addition to the strong domestic statistics, the Australia hotels portfolio which CDL HT purchased in 1Q10 also contributed to top- and bottom- line growth. Revenue contribution from Singapore, New Zealand and Australia was 81%, 7% and 12% respectively.

Property portfolio consists of 6 properties in Singapore, 1 in New Zealand and 5 in Australia. For the year, the portfolio recorded $51.4 million in revaluation surplus, a reflection of the strong underlying income. Total asset value is $1,787.1 million. CDL HT has total debt of $382.7 million with a gearing of 20.4%. The debt will be due in 2013.

Management gave an update on its Australia hotels with regard to the recent flooding. Similar to our note sent out on 5 January, the hotels are not physically affected and are still operational. To reiterate, the revenue stream from Australia is backed by a base and variable component whereby we estimate the variable component contributes approximately 1% to total portfolio revenue in FY2011E. CDL HT has performed strongly in FY10. We are still positive on the tourism sector for this year. We are forecasting FY11E DPU of 10.28 cents, translating to a dividend yield of 4.9%. We are maintaining our buy recommendation and target price of $2.38.