Monday, September 2, 2013

OCBC Reports 3 Sep 13

CDL Hospitality Trusts: Industry remained
challenging in July
Based on STB figures, we estimate that RevPAR for
Singapore hotels fell 8% YoY for July. 3Q13 for the sector
as a whole could well show a contraction like in 1H13. This
is disappointing as we were anticipating a possible YoY
growth in RevPAR figures for July and August, based on
industry sources. CDLHT’s hotels in Singapore are best
classified as being in the Mid-tier/Upscale categories. It is
worth highlighting that we anticipate a huge growth of
10.9% p.a. in mid-tier room supply, which means that
CDLHT’s Singapore hotels could face significant RevPAR
pressure over the medium-term. Previously using an RNAV
model, we have transitioned to a DDM model. Incorporating
a risk-free rate of 2.7% (versus 2.5% previously) into our
model, our FV drops to S$1.56 from S$1.73. We maintain a
HOLD rating on CDLHT.
More reports:
- Geo Energy Group – New kid on the mining block
- Olam Int’l: New Muddy Water report
News Headlines
• The White House’s push for congressional approval of
limited military strikes against Syria and the Aug jobs
report will dominate when investors return Tue from the
holiday weekend.
• Thai Beverage Public Co has appointed Maybank Kim Eng
as a financial adviser, as the beer brewer seeks to
integrate recently acquired Fraser and Neave.
• CNA Group's unit has landed a S$10.6m contract to
renovate, upgrade and expand the domestic terminals in
Ho Chi Minh's Tan Son Nhat International Airport.
• Rawa Investments, a wholly owned subsidiary of
Malaysia's sovereign wealth fund Khazanah Nasional, is
exercising a put option to sell a 10% stake in OUC back
to Raffles Education Corporation.
Key Singapore Indices
Close Chg % Chg
STI 3055.7 26.8 0.9
Catalist 179.6 unch unch
Finance 789.9 9.0 1.2
Property 707.9 4.0 0.6
Electronics 689.2 -2.2 -0.3
Vol(m) 4107.2 1099.3 36.5
Val(S$m) 1260.6 -476.3 -27.4
World Indices
Close Chg % Chg
Dow Jones 14810.3 -30.6 -0.2
Nasdaq 3589.9 -30.4 -0.8
S&P500 1633.0 -5.2 -0.3
FTSE 6506.2 93.3 1.5
KLCI 1717.6 -10.0 -0.6
Hang Seng 22175.3 444.0 2.0
Nikkei 13573.0 184.1 1.4
SET 1323.7 29.4 2.3
KOSPI 1924.8 -1.6 -0.1
TWSE 8038.9 17.0 0.2
Market Statistics (SG)
STI 52-week range 2,932 3,465
No. of gainers 347
No. of losers 199
No. of unchanged 144
Economic Statistics
S$/US$ 1.3 0.0
Yen/US$ 99.5 0.2
3-mth S$ SIBOR 0.4 0.0
3-mth US$ SIBOR 0.3 0.0
Crude futures (US$) 106.8 -0.8
Research Team
(65) 6531 9800
e-mail: info@ocbc-research.com
OCBC Investment Research
Market Pulse
3 Sept 2013
2
CDL Hospitality Trusts: Industry
remained challenging in July
● Huge supply growth for mid-tier
hotels
● QE tapering fears still affecting
yield plays
● Maintain HOLD
Had been hoping for a better July
In our 19 Aug Hospitality report we stated
that industry contacts indicated that July and
August may have been showing RevPAR
growth on a YoY basis for the industry as
whole. However, disappointing data for the
sector in July has just been published on
September 1. Based on STB figures, we
estimate that RevPAR fell 8% YoY for July.
We think certain players are continuing to
perform significantly better than their peers
within each category, and 3Q13 for the
sector as a whole could well show a
contraction like in 1H13.
Challenging environment continues
We believe that hotel room supply will
expand at 6.5% p.a. over 2013-2015 while
hotel room demand will grow at only 5.8%
p.a. Apart from the usual uplift in evennumbered
years like 2014 from more MICE
events, this supply-demand imbalance will
put pressure on real RevPAR growth.
CDLHT’s hotels in Singapore are best
classified as being in the Mid-tier/Upscale
categories. It is worth highlighting that we
anticipate a huge growth of 10.9% p.a. in
mid-tier room supply, which means that
CDLHT’s Singapore hotels could face
significant RevPAR pressure over the
medium-term. Recall that the 2Q13 RevPAR
for CDLHT’s Singapore hotels fell 8.5% YoY
to S$193. They were affected by increased
competition, weaker corporate demand and
the absence of a biennial event in April.
Yield plays hit by inevitable QE tapering
Concern over the timing of QE tapering by
the US Federal Reserve and its impact on
interest rate and bond yields continues to
weigh on the performance of the Asian
markets and yield plays like CDLHT since
May.
Cut FV to S$1.56
Previously using an RNAV model, we have
transitioned to a DDM model. Incorporating a
risk-free rate of 2.7% (versus 2.5%
previously) into our model, our FV drops to
S$1.56 from S$1.73. We maintain a HOLD
rating on CDLHT. (Sarah Ong)
. . . . .
Geo Energy Group: New kid on the
mining block
● Now a mine owner
● Adding five more concessions
● 15x PER vs. peers’ 36x
Geo Energy Group
Geo Energy Group (GEG) is a coal mining
specialist in Indonesia, which started as a
mining contractor, and has since moved on
to become a mine owner. It currently owns
the BEK Mining Concession (which we visited
recently) and has entered into five other
mining concessions.
Visit to BEK site
Located on a 4570ha site in Kutai Barat
Regency, East Kalimantan, BEK has a 6-year
mine life based on 12.5m tonnes of reserves
(also has 30.7m tonnes of resources and a
20-year concession from Apr 2011). We
understand that GEG has produced some
1.84m tonnes of coal from this site as of 30
Jun; and the company believes it is on track
to achieve its 2m-tonne target by year end.
While the caloric value is just above 3400
GAR, we understand that prices have been
holding up pretty well (~US$31-34/ton)
despite the slide in Newcastle coal prices;
this as end customers switch down to
cheaper inputs in wake of the still-sluggish
economies in China and India.
Also went to BJPE site
We also visited a 739.9ha site where GEG
provides mining services to the owner of the
concession, BJPE. In addition, GEG has
exclusive marketing rights over the semicoking
and high-thermal coal produced there.
According to management, GEG will continue
to secure new mining services contracts like
this. And it believes that it has an edge over
its competitors as GEG owns its own
equipment, thus giving the company greater
flexibility and cost control.

No comments:

Post a Comment