CDL Hospitality Trusts (CDREIT SP) – 1H22 DPU miss, but recovery remains on track
• Recovery accelerated in 2Q22
• Stronger NPI contributions from Singapore, Maldives and UK hotels
• RevPAR of three Singapore hotels surpassed their pre-pandemic levels in 2Q22
1H22 DPU jumped 67.2% YoY to 2.04 Singapore cents – CDLHT’s 1H22 revenue and NPI rose 49.0% and 37.8% YoY to SGD98.6m and SGD51.0m respectively, supported by higher demand and room rates in most portfolio markets. Pace of recovery accelerated in 2Q22 for most of CDLHT’s markets with stronger NPI contributions from Singapore, Maldives and UK hotels while New Zealand, Australia and Germany reported lower NPI contributions YoY. While 1H22 DPU jumped 67.2% YoY to 2.04 Singapore cents, it missed our expectations by 7% on lower-than-expected capital distributions.
Sequential improvement in 2Q22 RevPAR, except for New Zealand and Maldives hotels – 1H22 RevPAR improved YoY across CDLHT’s portfolio markets, except for New Zealand (-3.9% YoY as the hotel exited the isolation program in Jun 2022) and Australia (-3.0% YoY, as inter-state travel restrictions were only lifted from late Apr 2022). On a quarteron-quarter (QoQ) basis, RevPAR improved for all markets, but New Zealand (-19% QoQ) and Maldives (-53% QoQ due to seasonality) in 2Q22.
Singapore RevPAR grew 99.6%/72.1% YoY in 2Q22/1H22 – For Singapore hotels, RevPAR improved 99.6% and 72.1% YoY in 2Q22 and 1H22 respectively, driven mainly by higher average daily rate. Three out of six hotels exceeded their prepandemic RevPAR levels in 2Q22 while five surpassed their Jun 2019 RevPAR. Currently, CDLHT only has one Singapore hotel remaining on isolation business and was re-contracted with the government recently at close to market rate till the end of the year. Forward bookings remained strong for the remaining five Singapore hotels, supported by the return of international travellers, staycation, corporate groups and MICE demand in 2H22. We revise our estimates while increasing our risk-free rate to 3.25%. After adjustments, our fair value estimate remains at SGD1.45.
ESG Updates
CDL Hospitality Trusts (CDLHT) ranks below industry average in terms of governance and social issues.
However, CDLHT performs better than its peers in terms of environmental score. CDLHT demonstrates
robust efforts to further increase proportion of its green-certified buildings relative to peers. BUY. (Chu Peng)