• FHT’s 3Q18 DPU of 1.13 Scts (-9% y-o-y) below expectations.
• Results impacted by continued softness in corporate demand in Sydney and near term competitive landscape in FHT’s micro-market in Singapore.
• Market focused on short term DPU performance but forgetting inherent value with FHT trading at 10% discount to a conservatively valued book.

Difficult to Replicate Portfolio

We maintain our BUY call on Frasers Hospitality Trust (FHT) with a revised Target Price of S$0.80. 

While near term DPU is likely to be under pressure, we believe with FHT offering a high 6.7% yield, 50-60bps premium above its hospitality peers, it deserves a re-look by investors. This is especially as FHT has a portfolio of quality hotels in key gateway cities which are hard to replicate at FHT’s current trading yield.

Source: DBS Research - 30 Jul 2018