CDL Hospitality Trusts (CDLHT) reported its 3Q14 results with revenue below our expectations but DPU was in-line. Revenue rose 11.9% YoY to S$40.1m and was underpinned by the recognition of full hotel revenue from Jumeirah Dhevanafushi and slight gross rent increase of S$0.3m for its Singapore Hotels. DPU slipped slightly by 1.1% to 2.61 S cents after CDLHT retained S$2.8m for working capital needs (3Q13: S$2.9m retained).

For 9M14, revenue increased 11.3% to S$121.7m, or 69.9% of our FY14 forecast. DPU of 7.86 S cents was a 2.4% decline and formed 72.9% of our fullyear forecast. We expect a sequential improvement in 4Q14. Looking ahead, CDLHT believes the uncertain macroeconomic environment may continue to weigh on accommodation demand in its portfolio. We will provide more updates after speaking with management. Our Hold rating and S$1.80 fair value estimate is under review.

Source: OCBC Research - 28 Oct 2014