Far East Trust's (FEHT) 2Q16 results were within expectations. 2Q16 DPU fell 12.9% to 1.01 S cents, coming up to 22.4% of our full-year forecast. In comparison, 2Q15 DPU contributed 25.2% of FY15 DPU. The 1H16 DPU of 2.09 S cents currently makes up 46.3% of our full-year forecast. In comparison, 1H15 DPU contributed 48.5% of FY15 DPU.

2Q16 gross revenue fell 9.1% YoY to S$26.1m, coming up to 22.3% of our full-year forecast. 2Q16 Hotel REVPAR declined 7.5% YoY to S$136, while serviced residence REVPAU dropped 8.9% YoY to S$187. Both hotels and serviced residences were affected by lower occupancy and lower ADR.

2Q16 NPI dropped 9.7% YoY to S$23.5m, while distributable income fell 12.2% YoY to S$18.3m. Against yesterday's price of S$0.64, FEHT is currently trading at a blended FY16/17 forecasted yield of 7.1%. We place our HOLD rating and fair value of S$0.63 under review, pending more information from the briefing later.

Source: OCBC Research - 29 Jul 2016