Far East Hospitality Trust - CGS-CIMB Research 2022-10-28: A Good Set Of Results

Far East Hospitality Trust - A Good Set Of Results

FAR EAST HOSPITALITY TRUST (SGX:Q5T) | SGinvestors.ioFAR EAST HOSPITALITY TRUST (SGX:Q5T)
  • Far East Hospitality Trust (SGX:Q5T)'s 3Q/9M22 NPI of S$19.7m/S$57.2m ( +7.8%/+4.9%) was in line, forming 26.5%/76.8% of FY22F. Strong recovery in operations. 3Q22 revenue grew 2.0% y-o-y despite the divestment of Central Square on 24 Mar 2022. On a same-store basis, 3Q/9M22 revenue for hotels grew 4.7%/1.6% y-o-y as most hotels continue to be on minimum rent, while Service Residences revenue grew 44.9%/22.2% y-o-y and revenue from commercial premises grew 19.1%/14.8% y-o-y.
    • 3Q/9M22 hotel RevPAR increased 107.8%/53.8% y-o-y to S$137/S$80, but was still at 84% and 64% of pre-COVID levels as Vibe Hotel Singapore Orchard (formerly The Elizabeth Hotel), which represents 9.2% of hotel room inventory, was closed for renovation from Feb-Aug 2022.
    • Service Residences (SR) continue to perform above pre-COVID levels, with RevPAR increasing 43.7%/25.7% y-o-y in 3Q/9M22, helped by strong residential rents which lifted the long-stay SRs.
    • Rebranding initiative at Vibe Hotel has paid off, with average daily rate (ADR) increasing 33% from S$150 to S$200. While Far East Hospitality Trust’s hotels are not located along the Formula One (F1) circuit, its city hotels benefited from the uptick in F1 and MICE travellers during the weeks surrounding the F1 event. We understand that Far East Hospitality Trust’s room rates were up to S$100 higher during that period.
    • 4 out of nine of Far East Hospitality Trust’s hotels are on government contacts which will run until Dec 22/Jan 23. These hotels were re-contracted in Aug 22 at higher rates. While the contracted rates are below pre-COVID, these hotels were operating above minimum rent as gross operating profit was boosted by lower operating cost due to the low utilisation rate.
    • While a few of its hotels, including the four government-booked hotels, were operating above minimum rent in 3Q22, only one hotel started generating variable income as variable rent is calculated on a yearly basis, and hotels would need to make up for the weaker operation pre-reopening in 1H22. We understand that the ramp-up rate for hotels exiting government bookings has improved significantly compared to end- 2021/early-2022.
  • Far East Hospitality Trust’s JV assets, The Outpost and Village Sentosa, were taken off government contracts in Aug 22 and achieved 60% occupancy rate within one month.
  • Far East Hospitality Trust's gearing stayed low at 33.6%, cost of debt up q-o-q from 1.8% to 2.5%.
  • We keep our FY22-24F DPU estimates for Far East Hospitality Trust unchanged. We roll forward our estimates to FY25F. DDM-based target price for Far East Hospitality Trust falls from S$0.80 to S$0.73 as we factor in higher risk-free rate (from 2.5% to 3.0%), which pushed COE from 7.6% to 8.1%.
  • Far East Hospitality Trust is our top pick in the sector.




Above is the excerpt from research report by CGS-CIMB.
Clients of CGS-CIMB may access the full report in PDF @ https://www.itradecimb.com.sg/.




LOCK Mun Yee CGS-CIMB Research | Natalie ONG CGS-CIMB Research | https://www.cgs-cimb.com 2022-10-28



Previous report by CGS-CIMB:
2022-10-07 Far East Hospitality Trust - Reason For Optimism.

Price targets by 2 other brokers at Far East Hospitality Trust Target Prices.
Listing of research reports at Far East Hospitality Trust Analyst Reports.

Relevant links:
Far East Hospitality Trust Share Price History,
Far East Hospitality Trust Announcements,
Far East Hospitality Trust Dividends & Corporate Actions,
Far East Hospitality Trust News Articles















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