CDL Hospitality Trusts' (CDLHT) 4Q18 results were within expectations. 4Q18 revenue dropped 5.4% YoY to S$38.4m, pulled down by a lack of contribution from the two divestments in Australia and the closing of Dhevanafushi Maldives Luxury Resort (DMLR) for renovations.

DMLR is currently undergoing pre-opening preparation for its relaunch as “Raffles Maldives Meradhoo” in 2Q19. 4Q18 DPU dropped 2.1% YoY to 2.77 S cents.

On a full-year basis, FY18 DPU increased 0.4% YoY to 9.26 S cents or 104% of our full-year forecast. The difference with our forecast was due to S$13.0m in capital distributions made in FY18 (vs. S$5.7m in FY17), including S$7.3m made in 4Q18. This compares with our assumed amount of S$7.5m for FY18. Excluding capital distributions, FY18’s distributable income of S$98.6m met 99% of our full-year forecast, which we consider within expectations.

In terms of operating metrics, CDLHT’s Singapore RevPAR increased 2.6% YoY in 4Q18 as the portfolio saw demand from Chinese and Indian leisure travelers, stable corporate demand was stable, and additional business from the ASEAN Summit. Excluding Orchard Hotel (which saw revenue loss due to renovations), CDLHT’s Singapore RevPAR increased by 4.3% YoY in 4Q18.

For now, we maintain HOLD on CDLHT but place our fair value of S$1.45 under review.

Source: OCBC Research - 29 Jan 2019