Company Name: CDL HOSPITALITY TRUSTS
| Research House: Maybank Kim Eng | Price Call: HOLD | Target Price: 1.94 |
Maybank Kim Eng expects 14.2 million tourist arrivals in Singapore this year, up 8% from 2011, but hotel room supply is forecast to grow at a compound annual growth rate of 6.3% from 2011 to 2015, outstripping demand growth of 5.9%.
Overall, 11,441 new rooms from known projects will be added to the market between the second quarter of 2012 and 2015, Maybank said, adding that the additional supply of hotel rooms could dampen occupancy rates.
Property consultancy CBRE said in a report last week that Singapore hotel room rates were at a record high with revenue per available room (RevPAR) soaring.
In the first quarter of 2012, average daily rates of gazetted hotels grew 11.4% to $259 from a year
earlier and RevPAR increased 14.7% year-on-year to $224, CBRE said.
Maybank expects Singapore hotels to register a CAGR of 3.2% for average room rate over 2011-2015 fiscal years. This is likely to cap the share price of CDL Hospitality Trusts, which derived most of its revenue from the
city-state, the broker said.
Maybank maintained its hold rating and $1.94 target price on CDL. CDL shares were up 1.1% at $1.915 on Monday. The stock has risen 24% this year, outperforming the 12.5% gain in the FT ST Midcap Index.
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