SINGAPORE (Jan 30): DBS Vickers Securities is maintaining its “buy” call on Ascendas Hospitality Trust (A-HTRUST) with a target price of 98 cents, and is of the view that the trust’s asset-recycling strategy will continue to provide it earnings stability going forward.
The move comes after the manager of A-HTRUST posted a 3Q19 distribution per stapled security (DPS) of 1.45 cents, up 2.8% from a year ago and in line with expectations.
In a Wednesday report, analyst Mervin Song notes that the REIT’s hotel performance in the latest quarter is in line, or slightly better than its peers.
Its management also has a positive medium- to longer-term outlook for its hotel properties in Japan on expected strong inbound arrivals in the run-up to the 2020 Tokyo Olympics.
Although A-HTRUST's hotels in Australia continue to see supply headwinds in the latest quarter under review, Song highlights that the occupancy rate in Sydney remained high at over 90%, while Melbourne and Brisbane hotels remain healthy, in Song’s view, at the low-80% levels.
“Looking ahead, the operating environment in the medium [term] will likely be cautious for now, in view of the competition from new supply entering the [Australian] market,” says the analyst.
“We asked management if there will be any changes owing to the planned merger between the REIT’s Sponsor and CapitaLand. We understand that the current strategy of growing the platform remains a key focus and will continue in the immediate term to the benefit of unitholders,” he adds.
Units in A-HTRUST were up by 0.6% at 84 cents prior to the midday trading break, or 27.57 times FY19F earnings.
