020712 cdl h trust - ocbc
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Gardens by the Bay
Supertrees and Cloud Forest Singapore has reached another
major tourism milestone with the official opening of the 101-hectares
Gardens by the Bay last Thursday. The top 10 gated attractions for
2011 were Sentosa Island (excluding RWS), Universal StudiosSingapore, Singapore Zoo, Singapore Flyer, Skyline Luge, Science
Centre Singapore, Underwater World Singapore, Songs of the Sea,
Night Safari, and the MBS Sky Park. Night Safari has upwards of
1.1m visitors annually, which means the current minimum number of
visitors to make the top 10 list could be less than 1.1m. We would
not be surprised if the conservatories of Gardens by the Bay break
into the top 10 attractions list by 2015.
Solidifying the Marina Bay tourism cluster
Sentosa Island is the tourism heavyweight, accounting for half of the
top 10 attractions. With Gardens by the Bay and the recently-opened
Marina Bay Cruise Centre, the Marina Bay area will strengthen as a
tourism cluster that complements Sentosa. The obvious key
beneficiary will be MBS, but there should be significant spillover for
other hotel players. The continuous upgrading of Singapores position
as a leisure hotspot will help the city keep the crown as the global
MICE king.
Impact on hotel room demand
STB has a target of 17m visitor arrivals by 2015, implying a growth
rate of 6.6% p.a. from 2011. Even with a leakage from the
conversion of visitor arrivals into hotel rooms nights because cruise
passengers are much less likely to book hotel rooms, we estimate
that hotel room demand will grow by an enviable 6.4% p.a., easily
outstripping the growth in hotel rooms, which we estimate at 3.7%
p.a. The 6.4% estimate conservatively assumes no change in hotel
room nights per hotel guest.
Maintain BUY
We maintain our BUY rating on CDLHT and our RNAV-derived fair
value estimate of S$2.04. It is offering an attractive yield of 6.3%.
GARDEN OF SUPERTREES The unveiling of a major attraction
Marina Bay highlights
Good growth to continue for hotels
2 Jul 2012Company Update
CDL HOSPITALITY |BUY
Asia Pacific Equity ResearchSingapore | REITs
BUY (maintain)Fair value S$2.04
add: 12m dividend forecast S$0.12
versus: Current price S$1.95
12m total return forecast 11%
Analysts
Sarah Ong (Lead) +65 6531 9678
Kevin Tan +65 6531 9810
Key information
Market cap. (m) S$1,884.2 /
USD1,483.4
Avg daily turnover (m) S$2.8 /
USD2.2
Avg daily vol. (m) 1.7
52-wk range (S$) 1.345 - 2.12
Free float (%) 67.5
Shares o/s. (m) 966.2
Exchange SGX
BBRG ticker CDREIT SP
Reuters ticker CDLT.SI
ISIN code J85
GICS Sector Financials
GICS Industry REITs
Top shareholderHospitality Hldgs-
32.5%
Relative total return 1m 3m 12m
Company (%) 5 12 2
STI-adjusted (%) 2 15 5
Price performance chart
1.06
1.31
1.57
1.82
2.08
2.33
Jul-11 Oct-11 Jan-12 Apr -12
1500
1900
2300
2700
3100
3500
Fair Value CDREIT SP FSSTI
Shar e Pr i ce (S$) Index Level
Sources: Bloomberg, OIR estimates
Industry-relative metrics
0th 25th 50th 75th 100th
PB
PE
ROE
Beta
Mkt Cap
Company Indust r y Aver age
Percent i le
Note: Industry universe defined as companies under identical GICS classification listedon the same exchange.
Sources: Bloomberg, OIR estimates
Key financial highlights
Year Ended Dec 31 (S$m) FY10 FY11 FY12F FY13F
Gross revenue 122.3 141.1 156.9 165.1
Total property expenses -7.2 -5.9 -6.4 -6.6
Net property income 115.1 135.2 150.6 158.5
Income available for distribution 100.7 118.1 130.4 136.8
DPU per share (S cents) 9.6 11.0 12.2 13.0
Cons. DPU (S cts) na na 11.5 11.9
DPU yield (%) 4.9 5.7 6.3 6.6
P/NAV (x) 1.3 1.2 1.2 1.2
ROE (%) 10.2 11.7 7.7 8.0
Net income margin (%) 111.1 124.9 76.0 75.8
Please refer to important disclosures at the back of this document. MICA (P) 035/06/2012
MARKET CAP: USD 1.5B AVG DAILY TURNOVER: USD 2M
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OCBC Investment Research
Singapore Equities
2
Exhibit 2: Ranking of cities by number of international meetings, 2011
Source: Union of International Associations
0 100 200 300 400 500 600 700 800 900 1000
Geneva
Berlin
Barcelona
Tokyo
Budapest
Seoul
Vienna
Paris
Brussels
Singapore
Exhibit 1: Cruise visitor growth will only moderate hotel demand growth slightlyProject Name Arrivals by Sea
(m)
Arrivals by
Air/Land (m)
Total Visitor Arrivals
(m)
2011 1.33 11.77 13.2
ASSUMED INCREASE BY 2015 0.5
2015E 1.83 15.17 STB TARGET: 17.0
% INCREASE 37.6% 28.1% 29.1%CAGR (2012-2015) 8.3% 6.4% 6.6%
Sources: STB, OIR estimates
Note: Using Arrivals by Air/Land as a proxy for hotel demand
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OCBC Investment Research
Singapore Equities
Company financial highlights
Company financial highlights
Income statement
Year Ended Dec 31 (S$m) FY10 FY11 FY12F FY13F
Gross revenue 122.3 141.1 156.9 165.1
Total property expenses -7.2 -5.9 -6.4 -6.6
Net property income 115.1 135.2 150.6 158.5
Net finance costs -16.6 -13.2 -15.3 -16.7
Manager's management fees -10.2 -11.7 -12.9 -13.5
Other expenses -1.4 -2.8 -3.1 -3.2
Net income bef. revaluation 86.9 107.6 119.3 125.1
Revaluation gain on invstmt properties 51.4 73.2 0.0 0.0
Total return after taxation 135.9 176.3 119.3 125.1
Income available for distribution 100.7 118.1 130.4 136.8
Balance sheet
As at Dec 31 (S$m) FY10 FY11 FY12F FY13F
Investment properties 1,787.1 2,029.8 2,029.8 2,029.8
Properties under development 0.0 0.0 0.0 0.0
Cash (including restricted cash) 67.8 70.5 83.4 93.6
Total current assets 82.7 88.5 103.4 114.7
Total assets 1,869.9 2,118.5 2,133.3 2,144.6
Current liabilities ex debt 21.8 23.6 26.2 27.6
Debt 381.1 534.8 534.8 534.8
Total liabilities 409.7 570.8 574.8 576.9
Unitholders' funds 1,460.2 1,547.7 1,558.5 1,567.7
Total equity and liabilities 1,869.9 2,118.5 2,133.3 2,144.6
Cash flow statementYear Ended Dec 31 (S$m) FY10 FY11 FY12F FY13F
Net income of H-REIT 138.3 180.8 119.3 125.1
Adjustments -26.7 -49.2 25.7 27.6
Operating income before working cap chgs 111.6 131.6 145.0 152.8
Change in working capital 4.7 -0.9 0.5 0.3
Cash flow from operating activities 116.3 131.1 145.5 153.0
Cash flow from investing activities -244.4 -166.2 -11.1 -10.9
Cash flow from financing activities 190.2 37.8 -121.6 -131.9
Change in cash 62.1 2.7 12.9 10.2
Cash at beginning of period 5.7 67.7 70.5 83.4
Cash at end of period 67.7 70.5 83.4 93.6
Key rates & ratios FY10 FY11 FY12F FY13F
DPU per share (S cents) 9.6 11.0 12.2 13.0
NAV per share (S$) 1.5 1.6 1.6 1.6
PER (x) 13.7 10.7 15.8 15.2
P/NAV (x) 1.3 1.2 1.2 1.2
NPI margin (%) 94.1 95.8 95.9 96.0
Net income margin (%) 111.1 124.9 76.0 75.8
Gross gearing (%) 20.4 25.2 25.1 24.9
DPU yield (%) 4.9 5.7 6.3 6.6
ROE (%) 10.2 11.7 7.7 8.0
ROA (%) 7.3 8.8 5.6 5.9
Sources: Company, OIR forecasts
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Important disclosures
OCBC Investment Research
Singapore Equities
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