Far East Hospitality Trust

Far East Hospitality Trust: JPM initiates at Underweight with TP $1.05. Notes that Singapore hotel accommodation is no longer as cost-competitive as before given the appreciating SGD, and is now on avg 6% more expensive in USD terms relative to HK. Believes this, together with 20% growth in room supply over the next 3 years vs 18% target growth in visitor arrivals, is likely to cap the room rate growth for the sector. JPM highlights it has a flat earnings outlook, reinforced by on mgt’s lukewarm guidance, vs strong earnings outlook by consensus. Notes FEHT’s 5.1% Fy13e yield, and an implied cap rate of 4.8%, is not a compelling valuation. FEHT is a Singapore-listed hospitality REIT comprising a portfolio of 8 hotels and 4 service residences located in Singapore, with an aggregate appraised value of $2.4b. FEHT is managed and sponsored by Far East Organization. The sponsor holds 52% stake in the trust.