OCBC upgrades CDL Hospitality Trusts, but says it’s still not attractive

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OCBC upgraded CDL Hospitality Trusts to Hold from Sell, saying that after its recent around 9 percent selloff, it saw a “more reasonable risk-reward,” but that it was not yet attractive.

“We continue to believe CDLHT’s Singapore-heavy portfolio remains well-poised to ride the hospitality upcycle. However, we expect to see much more muted distribution per unit growth in the next half-year with a more robust pick-up in Singapore RevPAR arriving only in
fiscal 2019,” it said. RevPAR stands for revenue per available room.

OCBC also didn’t expect fireworks from the rest of CDL Hospitality Trusts’ portfolio.

“We also expect CDLHT’s New Zealand and Maldives assets to be a drag in the second half of 2018 – the former because of its high base in fiscal 2017 and the latter given that commencement of upgrading works for Dhevanafushi Maldives are expected to last till its re-opening in the fourth quarter of 2018,” OCBC said.

It kept its forecasts unchanged, leaving its fair value at S$1.42.

It noted that the unit is trading at 6.4 percent fiscal 2018 yield, below its five-year mean.

The unit ended Monday down 0.67 percent at S$1.49.

 

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