by winston » Wed Sep 05, 2018 9:32 am
SG Hospitality: Do not disturb
2Q18 results for the hospitality S-REITs under our coverage were all within expectation, albeit many on the lower end.
2Q DPU YoY growth came in at +0.0% for Ascott Residence Trust (ART), +2.9% for CDL Hospitality Trusts (CDLHT), +4.1% for Far East Hospitality Trust (FEHT), and -3.3% for OUE Hospitality Trust (OUEHT).
2Q RevPAR growth figures were generally disappointing.
Going forward, we continue to expect:-
1) robust leisure demand
2) soft corporate demand and
3) continued outperformance of Mid-Tier hotels locally.
We push back our expectations of a strong RevPAR pick-up from 2H18 to 2019, and believe defensive names from other sub-sectors may outperform hospitality.
For switch ideas, refer to our 31 July S-REITs report as well as yesterday’s S-REITs sector update.
Within hospitality, FEHT remains our top pick given its
1) 100% SG-based portfolio
2) the mid-tier positioning of its hotels and
3) the higher chance of operational outperformance given its relative underperformance prior to 2018.
Maintain NEUTRAL in the hospitality sector. FEHT remains our top pick.
Source: OCBC
It's all about "how much you made when you were right" & "how little you lost when you were wrong"