While CDLHT was able to continue to improve its room rates somewhat in Singapore, demand has eased, as seen by its lower occupancy rate of 79.3% in 4QFY2023, down 6.2 percentage points. RevPar in the most recent 2HFY2023 was up just 3.5% y-o-y, although it enjoyed longer stay on average.
For its UK properties, CDLHT managed to grow its RevPar at a stronger pace of 4.1% y-o-y for 2HFY2023. Net property income for UK assets was up 15.4% y-o-y thanks to an increase in inbound visits.
Japan was the star performer, with net property income up 115% y-o-y in 2HFy2023, with foreign visitors back in force since October 2022. RevPar was up 75% y-o-y, with a cheerier outlook for the rest of this year.
Thanks to the better performance, CDLHT grew the value of its portfolio by 7.8%.
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UOB Kay Hian's Jonathan Koh expects a strong lineup of events to help paint a positive outlook for CDLHT, and with China and Singapore in a bilateral 30-day visa exemption arrangement, the number of foreign visitors is likely to increase further.
"We believe CDLHT is well positioned to capture upside" from drivers such as asset enhancements at Grand Copthorne, states CGS-CIMB's Natalie Ong and Lock Mun Yee, who have maintained their "add" call.
However, using their dividend discount model, they've cut their FY2023 to FY2025 DPU projections by 15.6% and 17.6%, due to higher interest and tax expenses, thereby leading to a lower target price of $1.25 from $1.43 previously.
Similarly, UOB Kay Hian's Jonathan Koh, using his version of a dividend discount model, has reached a new target price of $1.48 from $1.57 previously. He maintains his "buy" call.
Krishna Guha of Maybank Securities, meanwhile, has trimmed his DPU estimates by 7%. However, after applying a lower discount rate, his new target price is $1.10, from $1.05 previously. CDLHT, to Guha, is also a "buy".
