To help businesses cope with the near-term economic headwinds from the COVID-19 outbreak, the government announced a S$4b Stabilisation and Support Package during the Singapore Budget 2020 yesterday.

Additional support will be provided to the most directly and adversely hit sectors, namely the tourism, aviation, retail, food services and point-to-point transport services. The Stabilisation and Support Package aims to provide job and cash-flow support to help firms retain workers.

For the aviation sector, the government announced a S$112m package to mitigate business’ cost pressures and protect jobs. Support measures including rebates on aircraft landing and parking charges, assistance to ground handling agents, and rental rebates for shops and cargo agents at Changi Airport. Singapore Arlines (SIA SP) [BUY; FV: S$9.90] will likely be the key beneficiary.

Separately, to help business in hospitality sector to tide over this difficult period and also to protect jobs, property tax rebate for the period 1 January 2020 to 31 December 2020 will be granted.

In addition, a new temporary bridging loan programme will be introduced for a year to alleviate the short-term cash flow and operating cost pressures of tourism sector enterprises.zzzzzzz

We believe Far East Hospitality Trust (FEHT SP) [HOLD; FV: S$0.65] and CDL Hospitality Trusts (CDREIT SP) [BUY; FV: S$1.62] are likely to enjoy the most benefits given FEHT is a pure play on Singapore hospitality and CDLHT’s high presence in Singapore (62% by FY19 NPI).

However, Ascott Residence Trust (ART SP) [BUY; FV: S$1.40] remains our top pick as we like ART’s defensive, geographically diversified portfolio, given the still uncertain outlook.

Source: OCBC Research - 19 Feb 2020