Thursday, July 26, 2012

CDL Hospitality Trust

CDL Hospitality Trusts is operating as a hotel real estate investment trust, through its subsidiaries. It was founded in 2006 and is headquartered in Singapore.

CDL Hospitality Trusts portfolio mainly consists of investments in hospitality related real estate assets as well as businesses. Its assets are distributed in many countries like Singapore, Australia and New Zealand. Some of popular hotels owned by CDL Hospitality Trusts are Grand Copthorne, M Hotel, Orchard Hotel, Copthorne King’s Hotel, Waterfront Hotel, and Novotel Clarke Quay in Singapore; Rendezvous Hotel Auckland; and Mercure Brisbane, Mercure Perth, Ibis Brisbane, Novotel Brisbane, and Ibis Perth located in Brisbane and Perth, Australia. It also operates Orchard Hotel Shopping Arcade, the famous shopping arcade near Orchard Hotel in Singapore.

CDL Hospitality Trusts is managed by M&C REIT Management Limited. This setup is a wholly owned subsidiary of Millennium & Copthorne Hotels plc. M&C REIT Management Limited is handling the overall administration and management of the assets of CDL Hospitality Trusts. They also control the function of managing new acquisitions.

M&C REIT Management Limited works has to work closely with the master lessees of the hotels and/or the hotel managers to implement thoroughly the CDL Hospitality Trusts (CDLHT) asset enhancement plans. M&C REIT Management Limited also has to work closely with both Millennium & Copthorne Hotels Plc as well as its parents, City Developments Ltd, which is one of the largest companies in Singapore.

M&C REIT Management Limited is managed by highly experienced Board of Directors who has in depth understanding and experience in asset, fund, real estate management and hospitality in not only Singapore but across the world.


As on 31.12.11 the company has improved it top line as well as bottom-line for the third consecutive year. On YoY the revenue has grown to $141 million from $122 million. The bottom-line has also grown to $176.3 million from $135.9 million. For this performance the company scrip is with outperform rating.
Such a improvement in performance is on account to tremendous improvement in tourist arrivals.

This year substantial growth is expected in tourist movement to Singapore for many reasons. One is International Cruise terminal which has already started operation. Also Communiqué Asia and opening of Gardens of the Bay in June are added attractions to improve tourist movement.

And with number of reputed hospitality assets under their portfolio CDLHT is ideally placed to take advantage of the situation thus improving their performance thereby maintaining Outperform rating.
The performance of the scrip from March till date supports the above observation.


With respect to industry average CDL Hospitality Trusts has performed better on Return on Assets and Return on Capital. The ratios of Total Asset Turnover, Fixed Asses Turnover and account Receivable Turnover are also better than industry performance.


In 2012, Arrival of visitors for CDL Hospitality Trusts is expected to be at 14.1m which would be a increase of 7 %YOY along with increase in revenue per available room at 6% for the year 2012. Occupancy rate for CDL Hospitality Trusts has been at 90% which is best compared to its peers in the industry. Considering all the above positive developments, some analysts expect the stock to reach a Target Price of S$2.08 .

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