Home Capital Broker's Calls

OUE Hospitality Trust's early refinancing to result in higher DPU, says RHB

Michelle Zhu
Michelle Zhu1/3/2018 10:45 AM GMT+08  • 3 min read
OUE Hospitality Trust's early refinancing to result in higher DPU, says RHB
SINGAPORE (Jan 3): RHB is maintaining its “buy” call on OUE Hospitality Trust (OUE HT), while raising its target price on the REIT to 91 cents from 88 cents previously to factor in a cost of equity (COE) of -7.2% and 2% terminal growth for FY18F and F
Font Resizer
Share to WhatsappShare to FacebookShare to LinkedInMore Share
Scroll to top
Follow us on Facebook and join our Telegram channel for the latest updates.

SINGAPORE (Jan 3): RHB is maintaining its “buy” call on OUE Hospitality Trust (OUE HT), while raising its target price on the REIT to 91 cents from 88 cents previously to factor in a cost of equity (COE) of -7.2% and 2% terminal growth for FY18F and FY19F, respectively.

This implies that the stock offers a respective FY18F-19F yield of 6.2% and 6.6% as distribution per unit (DPU) projections are adjusted higher by 2-3%, after taking into consideration interest cost savings from the early refinancing of the trust’s debts as its manager announced on 19 Dec.

In a Wednesday report, analyst Vijay Natarajan says the move places OUE HT in good shape ahead of the expected interest rate hikes in the near-term, as the average cost of debt post-refinancing would be 2.4%, or 40bps lower than the current interest cost of 2.8%. This should result in finance cost savings of $2-4 million per annum.

For more insights on corporate trends...
Sign In or Create an account to access our premium content.
Subscription Entitlements:
Less than $9 per month
Unlimited access to latest and premium articles
3 Simultaneous logins across all devices
Bonus unlimited access to online articles and virtual newspaper on The Edge Malaysia (single login)
×
Loading next article...
The Edge Singapore
Download The Edge Singapore App
Google playApple store play
Keep updated
Follow our social media
Subscribe to The Edge Singapore
Get credible investing ideas from our in-depth stock analysis, interviews with key executives, corporate movements coverage and their impact on the market.
© 2022 The Edge Publishing Pte Ltd. All rights reserved.
Unlock unlimited access to premium articles with less than $9 per month. Subscribe Now