FY23 Results – Two leap forwards with a return of MICE
- FY23 revenue rose 29% y-o-y to S$123.2m, full year DPS rose 49% y-o-y to 2.4426 scts, surpassing our estimates
- RevPAR across all major markets exceeded pre-COVID levels, with the exception of Japan which is still marginally behind; Singapore performance flat h-o-h albeit a high base in 1H23, which coincides with seasonal high quarter ending Dec-22, supported by return of MICE events and Formula 1 Grand Prix
- Full year valuation uplift of 1.7% y-o-y in SGD denomination, supported by positive cash flow trajectory
- We currently have a BUY call with TP of S$0.58, Estimates under review
Full year DPS of 2.4426 scts ahead of estimates.
Frasers Hospitality Trust reported full year FY23 revenue of S$123.2m (+28.5% y-o-y). Net property income for the year rose a strong 30.1% y-o-y to S$90.5m, while distributable income rose 49% y-o-y to S$52.3m. Strong operating performance was on the back of RevPAR improvement across all markets on a y-o-y basis, and supported by a lower cost of debt in 1H23. FY23 DPS of 2.4426 scts was 49% higher y-o-y, and ahead of our estimates.
Gross operating revenue above pre-COVID levels for all markets except Japan.
RevPAR across all major markets has exceeded pre-COVID levels, with the exception of Japan. Singapore continues to be the crown jewel with a 2H23 RevPAR at 305% approximating 119% of pre-COVID levels. Albeit a traditionally seasonal high base in 1H23, we are pleasantly surprised and note that 2H23 performance amongst the Singapore assets has been well supported by MICE events and the F1 Grand Prix which has resulted in a flat h-o-h performance.
Other geographical markets for the likes of Australia, UK and Malaysia are also seeing RevPAR growth supported by a return of MICE events to a level of 9 – 13% higher than pre-COVID levels. On a full year basis, gross operating revenue has recovered to c.100.4% to 117.7% across all markets, a c.30% to 65% increase y-o-y.
Gross operating profits has moved in tandem in Singapore, Malaysia and Germany to exceed pre-COVID levels, with the exception of Australia, UK and Japan which are still below pre-COVID levels.
Improving ICR ratio on the back of low gearing rate of 34%
Interest rates ended the financial year at 3.1% (76% hedged to fix rates), up 80bps from end FY22, while gearing remains low at 34% in comparison to sector peers. ICR improved from 2.6x in FY22 to 3.6x in FY23 on the back of improving operational cash flow. A total of c.S$150m worth of loans will come due in FY24, of approximately 21% of FHT’s total loan book.
Full year valuation uplift of 1.7% y-o-y in SGD denomination.
FHT’s full year valuations came in stronger than expected, with a valuation uplift seen across all portfolio assets in local currency terms, with the exception of Maritim Dresden, which declined 5.3% y-o-y. Portfolio valuation rose 1.7% y-o-y in SGD terms albeit a strong SGD. Cap rates has remained stable across all portfolio assets with the exception of Maritim Dresden (Germany), which has seen a slight expansion in cap rate expansion.