Group Research – Equities 12 Nov 2021

Aviation and hospitality

Singapore-Denmark VTL ‘snaps’ – Which reopening picks are resilient

• Singapore-Denmark VTL ‘snaps’ after Denmark imposed an up to 10-day self-isolation period for Singapore travelers, citing high COVID-19 infection risks

– The move came after the Council of European Union (EU) removed Singapore from its list of countries with no travel curbs
• The concern is that other countries with established VTLs currently, especially those in the EU – Italy, Spain, Germany, France, Netherlands, Finland and Sweden – may also impose some form of travel curbs for Singapore visitors

• In addition, the formation of new VTLs could also slow or come to a halt in the near term, until daily new cases in Singapore comes down to a lower level.

• VTL instability is a near-term set-back for SIA, SATS, SIAE and hotel REITs with significant Singapore assets FEHT (100% of revenue from Singapore in FY20) and CDL HT (43% of revenue from Singapore in FY20)

• But this is just a temporary setback as Singapore will continue to forge ahead with the reopening of its international borders

• Prefer ART (9.3% Singapore revenue exposure in FY20) for its diversified geographical exposure and ARA US (100% US revenue exposure) that rides on US domestic demand recovery and the opening of its airspace to all vaccinated travelers around the world.