Analysts from RHB Group Research and Maybank Kim Eng remain cautious on CDL Hospitality Trusts (CDLHT) after it released its 1QFY2021 ended March business update on April 29.

RHB analyst Vijay Natarajan kept his ‘neutral’ rating with an unchanged target price of $1.25.  Similarly, Maybank Kim Eng analyst Chua Su Tye kept his ‘hold’ rating and target price of $1.30.

Natarajan calls CDLHT’s performance for the 1QFY2021 "mixed", noting that net property income (NPI) for its Singapore portfolio fell 35% y-o-y on lower revenue per available room resulting from four out of its six hotels being utilised for government bookings and master leases. On-going border restrictions and the recent rise in community infections prompt Natarajan's view that any meaningful recovery will potentially be delayed to the following year.


SEE:CDL Hospitality Trusts posts 19% q-o-q decline in NPI for 1Q21


For its overseas portfolio, Natarajan points out that New Zealand and the Maldives were the top performers on the back of government bookings and high-end leisure travel respectively. However, while income from New Zealand is expected to remain stable until August, he points out that demand for the Maldives portfolio is expected to slightly soften in 2Q and 3Q, while outlook for the UK and Japan remains bleak given ongoing movement restrictions and Japan’s state of emergency.

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Meanwhile, Chua takes a marginally positive view on the 1QFY2021 performance, highlighting that CDLHT’s revenue and NPI for its Singapore hotels (excluding W), which fell 38% and 31% y-o-y respectively, was an improvement from the 68% and 49% y-o-y in the 4QFY2020.

He foresees CDLHT’s Singapore portfolio will continue being supported by government bookings into 3QFY2021 as well as staycations and corporate groups.


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Nonetheless, both analysts believe that the near-term outlook for CDLHT remains uncertain. Natarajan views that demand remains dampened, with the exception of government bookings for isolation facilities in Singapore and New Zealand as well as pent-up travel demand in the Maldives. “We believe the optimism from vaccination roll-outs is fully priced in, with key risk being prolonged border closures,” he adds.

Chua is similarly bearish on CDLHT’s demand recovery, and prefers Ascott Residence Trust (ART) and Far East Hospitality Trust (FEHT) as sector picks. “We prefer ART for its long-stay assets and upside from capital distributions amid slower DPU growth, and FEHT for its Singapore-focused assets and master lease contributions,” he says.

As at 2.52pm, units in CDLHT are 1 cent or 0.8% lower at $1.24.