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NRA Capital Pte Ltd

Written by: Editor (Admin)

Monday 2 Feb 2015

Frasers Hospitality Trust - First reporting period from 14-Jul-14 to 31-Dec-14

Frasers Hospitality Trust beats forecast for net property income by 2.3%

Lower owner expenses while key markets register firm performance lead to a better than expected result

Frasers Hospitality Trust (FHT) posted a net property income (NPI) of $41.8m and Distributable Income of $35.7m (including foreign-sourced income from the entities in Japan yet to be distributed to FHT). These figures were 2.3% and 5.3% higher than earlier forecast by FHT.

On local currency term, the good performance in revenue are driven from the United Kingdom, Australia and Japan markets, which reported 11%, 6% and 15% better versus FHTs own forecast numbers but partially offset by worst performance in Malaysia. According to FHT, their estimated DPU based on the released figures is 2.97 cents (including foreign-sourced income), bringing the half year distribution yield to 3.5%.

FHT operates 6 luxury hotel properties and 6 serviced residences located across the world. Currently, the collective portfolio has a total of 1928 hotel rooms and 842 serviced residence rooms in seven key gateway cities. The properties and their contribution to the NPI of $41.8m are in Singapore (33%), United Kingdom (26%), Japan (16%), Australia (14%) and Malaysia (11%).

Our view

Singapore market looks set to weaken in 2015 as hotel room oversupply builds up in the face of declining tourist numbers. According to Singapore Tourism Board statistics, tourist numbers fell by 3.4% yoy in 2014.

The Malaysian market may recover in 2015 as the negative sentiment surrounding travel to Malaysia abates. Visitor arrivals from China decreased 11.2% in 2014 according to last reported statistics.

Japan and Australia are likely to see higher tourist numbers as their depreciating currency attracts more international visitors.

The United Kingdom is neutral as European visitors will be affected by the depreciating Euro. The relative weakness of the Pound may bring in visitors from further overseas, offsetting diminished Eurozone tourists.


FHT is fully priced in based on its annualised base yield of 5-6%, excluding foreign-sourced income.  As compare to its peers of market average of 7% yields. Bloomberg consensus on target price is 0.94.  So far, 2 analysts call buy, 1 hold and 1 sell recommendation on FHT.



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