CDLHT announces its Q1 results this morning which was reasonable well received.
NPI and DPU are up 6.4% and 9% respectively as a result of higher contribution from the New Zealand due to higher rental variable component that contributes to the stronger performance.
Trading conditions in other parts of the market like Singapore, Japan, UK, Australia and Maldives remain competitive and performances are still down.
If we look at the Singapore market, Q1 revpar are only slightly down from the previous year. It also trend higher than the previous quarter which is at $154 (see link). Recall that I mentioned previously the revpar during GFC went down to as low as $149. I think we are seeing bottoming taking place and will trend up from here, specifically from 2018 onwards when the law of demand outweigh the supply in the hospitality sector as a whole.
The Maldives market continued to see poor performance with a 8,8% fall in revpar due to competitive pricing pressure and also the relative strengthening of the USD. Thankfully, there's a minimum rent which helps to mitigate the drop.
It remains to be seen if it is right in the first place to venture into Maldives, a territory which appears relatively unknown to unitholders.
The Japanese market also continued to see pricing pressure with a drop in revpar by 7.2% yoy, albeit with higher occupancy to mitigate the drop. With tourist arrivals set to trend a lot higher leading up to 2020 Olympic, I think this market might do well in the coming quarters ahead.
I was supposed to go to their AGM today but thought otherwise since I have gone to the FEHT AGM not long ago.
I still believe current valuation has not priced in the positive scenario and I think it will operationally perform better than it is today so this will still be a strong keep for me in terms of relative performance. In terms of valuation, I think it's also not very expensive as it has traditionally trades at above 1.2x NAV in good times.
Vested with 60,000 shares.