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Building blocks for a brighter future

Investment Thesis

Attractive valuation buffers. CDL Hospitality Trust (CDLHT) currently trades at a P/NAV 0.9x or -0.5 SD (standard deviation) of its mean of 1.0x. We believe CDLHT remains on track to ride the travel demand recovery in 2022 and beyond. We maintain our BUY call with a TP of S$1.35 on a robust
c.18% CGR in distributions over FY21-23F.

Awaiting flight as borders reopen. Travel borders (domestic and international) will reopen from 4Q21 and we believe this marks the start of a multi-year recovery trend as global vaccination rates pick up. CDLHT’s core Singapore hotels have secured a stable source of revenue from the government while overseas hotels in the UK, Europe and Australia are poised to benefit from the rebound in domestic travel, ahead of the reopening of international borders.

Broadening horizons to an expanded lodging asset class. The pivot towards the built-to-rent (BTR) sector amongst other possible future lodging asset class highlights the management’s strategic intent to seek resilience through
diversity and earnings stability post the pandemic. With a varied demand driver compared to hospitality assets, we believe that the BTR investment is value accretive and complementary to its portfolio.