Singapore Hospitality REITs - CGS-CIMB Research 2023-01-18: Ending 2022 With A Bang

Singapore Hospitality REITs - Ending 2022 With A Bang

  • 2022 international visitor arrivals (IVA) of 6.3m beat Singapore Tourism Board’s (STB) full-year estimate of 4.5-6m, forming 33% of 2019’s IVA. In the past four months, IVA was 53-54% of 2019 levels.
  • STB forecasts that IVA could double y-o-y to 12m-14m in 2023 (2022: 6.3m), reaching 63-73% of 2019 levels, with full recovery expected by 2024. This is largely in line with our 12m-16m 2023 IVA forecast.
  • We think this newsflow could provide some support for hospitality S-REITs given that Singapore accounts for 100%, 66% and 17% of the AUM of Far East Hospitality Trust (SGX:Q5T), CDL Hospitality Trusts (SGX:J85) and CapitaLand Ascott Trust (SGX:HMN), respectively.
  • Our picks for the sector in order of preference are CapitaLand Ascott Trust, Far East Hospitality Trust and CDL Hospitality Trusts.
    • CapitaLand Ascott Trust is our top pick in the sector. Despite its geographically diversified portfolio, CapitaLand Ascott Trust will benefit from China’s reopening as Chinese tourists account for 15-30% of tourists in four out of eight of its key markets while its extended stay rental housing and student accommodation assets continue to provide income visibility owing to their high occupancies and single-digit rental growth.
    • CDL Hospitality Trusts's share price in the past three months (+c.30%) has outperformed its peers (+20%), leaving limited upside to our valuation. We recommend Singapore-focused Far East Hospitality Trust as an alternative to ride the expected rebound in Singapore’s hospitality sector.

Above is the excerpt from research report by CGS-CIMB.
Clients of CGS-CIMB may access the full report in PDF @

LOCK Mun Yee CGS-CIMB Research | Natalie ONG CGS-CIMB Research | 2023-01-18

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