Ascott Residence Trust - DBS Research 2022-05-05: Longer-Stay Lodging Segment Holding More Than Its Weight

Ascott Residence Trust - Longer-Stay Lodging Segment Holding More Than Its Weight

ASCOTT RESIDENCE TRUST (SGX:HMN) | SGinvestors.ioASCOTT RESIDENCE TRUST (SGX:HMN)
  • Ascott Residence Trust (SGX:HMN)'s portfolio RevPAR in 1Q22 rose 22% y-o-y to S$67 even with the Omicron impact felt towards the earlier part of the quarter.
  • Pent-up demand was strong in March 2022, particularly in the UK, US, Japan, and Australia.
  • Green shoots we see for Ascott Residence Trust’s portfolio in the coming quarters will include:
    • US in the coming months of spring break,
    • Japan, as leisure demand returns with “Go To Travel” reintroduced and potential international border reopening, and
    • UK, which is showing sustained demand for business and corporate bookings.
  • Longer-stay segment contributed ~28% of Ascott Residence Trust's gross profit for the quarter on a current ~17% AUM exposure to the segment. Segment occupancy remains resilient with high average occupancy of above 95% and rental growth of ~5%. Ascott Residence Trust will be increasing its target exposure in the long-stay segment from 15-20% to 25-30%.
  • Ascott Residence Trust's gearing remains healthy at 37.8%, and cost of debt was low at 1.6%. Average cost of debt will potentially see a 10-15bps increase in the upcoming refinancing exercise. An approximate 10bps increase in interest rates will reflect as a 0.5% decline in DPUs.
  • Ascott Residence Trust's Share Price currently trades at book at 1.0x P/NAV and on attractive 4.9% forward FY22 yields. Compelling growth in DPU supported by more resilient income from longer-stay lodging assets; we estimate a 12% CAGR in DPU between FY22-24.
  • Our DCF-backed target price for Ascott Residence Trust is raised to S$1.40 as we roll forward to FY23F earnings, and ~S$850m of acquisitions in the past year in the longer-stay lodging asset class has been fully priced into estimates. Future acquisitions to pose an upside to the target price and are not incorporated into the current estimates.




Above is the excerpt from report by DBS Group Research.
Clients of DBS may access the full report in PDF @ https://www.dbs.com/insightsdirect/.




Geraldine WONG DBS Group Research | Derek TAN DBS Research | https://www.dbs.com/insightsdirect/ 2022-05-05



Read also DBS's most recent report:
2022-08-05 Ascott Residence Trust - Strongest Recovery Since Pandemic; RevPAU Almost Doubled Y-o-y.

Price targets by other brokers at Ascott Residence Trust Target Prices.
Listing of research reports at Ascott Residence Trust Analyst Reports.

Relevant links:
Ascott Residence Trust Share Price History,
Ascott Residence Trust Announcements,
Ascott Residence Trust Dividends & Corporate Actions,
Ascott Residence Trust News Articles















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