Ascendas Hospitality

Ascendas Hospitality (ASHT): FYMar13 revenue (for period 27 Jul ’12 to 31 Mar ’13) missed expectations, but DPU beat due to cost savings. Note, there is no comparative P&L figures because the acquisition of the Portfolio of ASHT was only completed on 27 Jul ’12. Revenue came in at $138m, below HSBC’s estimate, due to weakness in Australian hotel revenue. Australia hotel RevPAR was A$130, weaker than expected, as the commodity sector and the general Australian economy remained soft. Ongoing refurbishments at 6 of the 7 Australia hotels in the portfolio, also put pressure on occupancy rates. Nevertheless, cost efficiencies achieved under Accor’s mgt helped the Australian hotels achieve an NPI margin of 32.5%, with the improvements coming in earlier than expected. This helped DPU at 4.9cts (including waiver of sponsor’s distribution) beat mgt forecast by 6.7%. ASHT’s China hotels performed broadly in line, while the Japanese asset, Ariake Sunroute, continued to experience some drag from the weaker JPY. HSBC maintains at Neutral with TP $0.95. Notes the latest Park Hotel acquisition will help diversify ASHT’s portfolio concentration away from Australia, but expects the acquisition to be 3-6% dilutive to DPU, given the recent softness in corporate demand for Singapore hotels. ASHT’s est annualized yield is approx 7.2%.