CDL HTrust: Citi upgrade to Hold from Sell, but reduce TP to $1.46 from 1.76. Maintain +8% RevPar growth forecast for the SG Hotels in FY11, but lower FY12/13E RevPar forecast to -2% p.a. (from +6%/+5%). House upgrade the stock given the sharp price decline and it now offers yields of over 7%.
However, given the volatility of RevPar and its impact on DPU, raise the risk rating to High Risk (from Low Risk). If assuming a recession and tourist arrivals decline, expect RevPar to drop significantly given the increased stock/competition and tip FY12E RevPar falls 28% (instead of -2%), 12E DPU will decline by 23%, including a 12M forward DPU of 10.1c, with worst case fair value at $1.20.
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