CDL Hospitality Trusts - DBS Research 2023-07-31: Building Resilience Through Diversity & Earnings Stability

• CDL Hospitality Trusts (SGX:J85) reported 1H23 rise in gross revenue and net property income to S$119.2m (+20.9%) and S$62.9m (+23% y-o-y).

An encouraging start to 1H23.

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• We note that distributable income increased by a similar 23.8% y-o-y to S$31.2m, translating to a DPU of 2.51 cents (after 10% retention), which was higher by ~23% y-o-y.
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Financial metrics: stable gearing, lower fixed rate hedges.

• CDL Hospitality Trusts's gearing levels remained stable at 37.9%, with a headroom of close to S$715m (to 50% gearing) with minimal expiries in 2023 (~7.6% of overall debt). Interest costs inched higher to ~4.1% (vs 3.8% in Mar 2023).
• We note that fixed rate debts had dipped to ~45%, which is done on purpose given management’s view that hedging too high a level will be costly. Our expectations of strong EBITDA growth in FY23-24F should be able to compensate for the increase in interest rates, which should be nearing a near term peak.

Robust outlook in 2H23.

• Read more at SGinvestors.io.

Geraldine WONG DBS Group Research | Derek TAN DBS Research | https://www.dbs.com/insightsdirect/ 2023-07-31 SGinvestors.io

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