CDL Hospitality Trusts - DBS Research 2022-08-01: Robust 1H22 Results On Low Base Effect; Shooting For The Stars

• CDL Hospitality Trusts (SGX:J85) reported a 67% y-o-y rise in DPU to S$0.0204 (vs S$0.0122 in 1H21) anchored by a firm recovery across its key markets, driven mainly by strong leisure demand. This translates to about ~40% of our full year forecasts.
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• CDL Hospitality Trusts's interest costs rose by 21% mainly due to additional debt taken for the acquisition of Hotel Brooklyn and UK built-to-rent (BTR) project.
• Overall gearing stayed stable at 39.5% while overall cost of debt inched higher to 2.3% (which was 20 basis points higher q-o-q). Interest coverage ratio comfortable at 3.5x.

Key observations on CDL Hospitality Trusts's 1H22 results

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• CDL Hospitality Trusts's manager saw strong demand recovery in 2Q22, on the strong momentum in 1Q22, boosted by the leisure market and expects corporate demand to follow suit come 2H22. Overall, the manager remains positive that the hospitality sector remains at an inflection point with a stronger 2H22 anticipated on the back of returning corporate travel, and MICE meetings.
• Singapore hotels hit variable rent levels. Singapore hotels led the charge and have risen above its minimum rent for the 5 city-hotels while the W Hotel remains one of Singapore’s favourite holiday destination for staycation and leisure guests. Utility contracts are locked in until end of 2022 and any increases will be felt later.
• Maldives hit new highs on the back of strong leisure demand. Maldives has powered ahead with 1H RevPAR rising by close to 65% y-o-y. The dip in 2Q22 was due to the usual seasonally low period but 2Q22 revPAR remained 63% higher compared to a year ago.

CDL Hospitality Trusts - Valuation

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Geraldine WONG DBS Group Research | Derek TAN DBS Research | https://www.dbs.com/insightsdirect/ 2022-08-01 SGinvestors.io

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