SINGAPORE (Feb 23): CIMB is keeping its “hold” recommendation on Far East Hospitality Trust with a marginally higher target price of 57 cents, from 56 cents previously.
In a Wednesday report, CIMB lead analyst Yeo Zhi Bin says it is “difficult to see a recovery in 2017” for the REIT.
The manager of FEHT on Wednesday reported a 4.3% decline in 4Q distribution per stapled security (DPS) to 1.12 cents. Quarterly gross revenue fell 4.6% to $27.5 million.
Net property income dropped 5.4% to $24.9 million while income available for distribution fell 2.3% to $20.2 million.
(See also: Far East Hospitality Trust sees 4.3% fall in 4Q DPS to 1.12 cents)
“The 4Q16 results reaffirm our view that the green shoots of recovery for the hospitality sub-sector will only appear in 2018,” Yeo says.
Yeo says RevPARs are expected to “further edge downwards” in 2017, albeit at a smaller magnitude compared to 2016. This is mainly due to a 5.8% increase in room supply for 2017, and a lacklustre corporate demand.
FEHT’s hotel RevPAR had contracted 7.3% in 4Q, while serviced residence RevPAR fell 2.3%.
Yeo says CIMB is reiterating its “hold” call due to the expected “continued RevPAR pressure”.
As at 4.01pm, units of Far East Hospitality Trust are trading half a cent higher at 60 cents.
