Ascendas Hospitality Trust

Ascendas Hospitality Trust: 3QFYMar13 results above estimates. DPU was 1.77 cts (with sponsor waiver), above prospectus forecast of 1.69 cts, because of lower than expected expenses. Operationally, the performance of the Australian hotels was weaker than expected, with RevPar of A$129/day, -4% qoq and against the A$139/day prospectus forecast (-7%). Demand was weak due to ongoing refurbishments and the softening economic environment. However, margins continued to surprise in China and Australia. Mgt expects RevPar to pick up in Australia in FY14 after the refurbishments are completed. Mgt remains on the look-out for more assets in its three existing operating markets as well as Singapore, HK and South Korea. Stan Chart believes AHT will follow its sibling A-REIT’s model of strong inorganic growth – AREIT grew its AUM by more than 3x within the first two years of listing. AHT’s leverage was at 35.8% as of 31 Dec 2012; it has $75-180m headroom before reaching a leverage of 40-45%. With AHT trading at 1.3x P/B, 7.1% FY13e yield, Stan Chart believes current valns do not price in organic growth. Reiterates Outperform, lifts TP to $1.05 from $0.99.