Far East Hospitality Trust (FEHT) reported another lacklustre set of 1Q15 results this morning. Gross revenue dipped 10.8% YoY to S$27.4m and DPU slipped 17.7% to 1.07 S cents, underpinned by weaker demand for accommodation due to decline in visitor arrivals and the uncertain macroeconomic landscape. This formed 21.6% and 20.4% of our FY15 projections, respectively.

Although we expect FY15 to be a more backend-loaded year, this set of results still fell short of ours and the street’s expectations. Management expects near-term headwinds to persist, although there may be potential improvement in visitor arrivals from MICE activities, sports tourism and new attractions. We will provide more details after the analyst conference call. We maintain our HOLD rating but will likely lower our forecasts and S$0.82 fair value estimate on the stock.

Source: OCBC Research - 29 Apr 2015