OUE Hospitality Trust (OUEHT) reported its 4Q14 results, with DPU of 1.78 S cents coming in 6.6% higher YoY. Revenue of S$30.4m was an increase of 4.8%. For FY14, OUEHT’s revenue of S$115.9m was comparable to our estimate of S$115.4m. Income available for distribution and DPU came in at S$89.0m and 6.74 S cents, and this formed 99.8% and 99.7% of our full year projections, respectively. Results were thus within our expectations. OUEHT’s gearing stood at 32.7%, as at 31 Dec 2014, and 100% of its debt have been fixed via interest rate swaps with a weighted average remaining tenure of 1.5 years.

Looking ahead, although the hospitality sector will continue to face headwinds, in our view, we believe the SG50 celebrations will see more events being organised and this should help attract more visitor arrivals to Singapore. OUEHT will be a beneficiary of this given the prime location of its assets in the Orchard Road area.

We maintain our HOLD rating and S$0.85 on the stock.

Source: OCBC Research - 28 Jan 2015