InvestIdeas

Not vested.

CIMB cuts target price to S$1.45 (from S$1.74)

Citigroup cuts target price to $0.89 (previously $1.16)

ASCOTT WINS THREE AWARDS FOR EXCELLENCE IN AUSTRALIA
Singapore, 10 September 2008

The Ascott Group’s (Ascott) Somerset serviced residences in Melbourne, Australia have swept three accolades at the recent Hotel, Motel & Accommodation Association (HMAA) of Victoria Awards for Excellence.

Ascott’s property and staff members were winners in the following categories:
· New Tourism Development Accommodation - Somerset Gordon Heights
· Outstanding Contribution by an Industry Newcomer - Ms Virginia Le, Guest Service Officer, Somerset Gordon Place/Somerset Gordon Heights, and
· Outstanding Contribution to Back of House - Mr Tak Lo, Maintenance Supervisor, Somerset Gordon Place/Somerset Gordon
Heights

In its ninth year, the HMAA Awards for Excellence recognise the outstanding contributions by businesses and individuals to the accommodation industry in Victoria. Victoria’s Minister for Tourism and Major Events, the Honourable Tim Holding, attended the awards ceremony. More than 200 prominent figures from the Australian tourism and hospitality industry were also present.

Mr Gerald Lee, Ascott’s Deputy CEO (Operations) said: “Ascott’s properties in Australia have performed well in providing award-winning services and high quality products. Our service excellence is also underpinned by strong performance with healthy occupancy of over 80% at our Australia properties. Revenue Per Available Unit has increased by 7% year-on-year as at July 2008. We are heartened that Somerset Gordon Heights has been recognised as an accommodation of excellence in its first year of operations.”

Mr Lee added: “Our staff - Ms Le and Mr Lo – also represent the attributes that typify the Ascott employee. Everyone on the team shares a single focus to offer great service to our residents. Their dedication, strong service values and commitment to quality have ensured a truly great home-like experience for our residents.”

Mr Tak Lo, Maintenance Supervisor, Somerset Gordon Place/Somerset Gordon Heights said: “I am happy to have won this award. Working on the full refurbishment of Somerset Gordon Heights last year has also been the highlight of my time here at Ascott. It has sharpened my skills and enabled me to learn new things. Since joining Ascott, I have had the experience of interacting with colleagues from different nationalities and that has exposed me to different cultures. There is no greater satisfaction than working as a team to make our guests happy and I am glad to be part of a great international company.”

Ascott currently has seven operating properties in Australia, in Hobart, Melbourne, Perth and Sydney. Our largest property in Australia, Citadines Melbourne on Bourke, is due to open in 2010.

Not vested. From CIMB:-

Ascott Residence Trust (S$0.96) - REVPAU growth underestimated

We upgrade ART to Outperform from Neutral as we anticipate an Asian-led global
economic recovery to catalyse REVPAU growth. We believe that ART's key markets, Singapore and Philippines, will lead the recovery given government initiations and a greater portion of the short-stay segment.

We now forecast REVPAU growth of 5-30% for FY10-11 (3-10% previously) for these two markets, based on their 1H09 performance and management guidance. Our DPU
estimates increase by 11-13% accordingly.

We also roll forward our target price to CY10 and arrive at a higher target price of S$1.21 (from S$0.88), still based on DDM valuation (discount 9.1%). At P/BV of 0.7x and yields of 7.6%, ART is undervalued against its closest peer CDLHT (P/BV 1.0x, yields 5.5%).

Ascott opens 5th residence in Beijing

Capitaland's serviced residence unit, The Ascott Limited, has opened its fifth serviced residence in Beijing. The property, Ascott Raffles City Beijing, marks the first time an Ascott serviced residence has partnered with one of CapitaLand's Raffles City mixed developments.

'AscottRaffles City Beijing is our fourth property to open in China this year, reaffirming Ascott's commitment to grow our presence in the mainland,' said Lee Chee Koon, managing director of Ascott's North Asia division. Besides acquiring new properties and managing properties for third party owners, CapitaLand's mixed developments such as Raffles City are another platform for Ascott to rapidly grow its network of serviced residences in China, Mr Lee said.

Ascott is now working on opening serviced residences within another two Raffles City
developments - Raffles City Hangzhou and Raffles City Ningbo. There are seven Raffles City complexes worldwide and five in China.

Ascott Raffles City Beijing, which is located at Dongzhimen in the city's Dongcheng District, has 162 units ranging from one to three-bedroom apartments. Ascott now has 25 properties with about 5,000 apartment units across 12 cities in China - including six properties which will open by 2011.

Ascott, the world's largest international serviced residence owner-operator, has around 19,000 operating serviced residence units in key cities of the Asia-Pacific, Europe and the Gulf region, as well as another 6,000 units that are under development.

Source: Business Times

This type of reports looks only at the upside and forget about looking at the risks. In this case, it's Swine Flu ...

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Not vested. From Kim Eng:-

1) Ascott REIT – Company Update (Anni Kum, DID: 6432 1470)
Previous Day Closing price: $1.14
Recommendation: Buy (maintained)
Target price: $1.29 (maintained)


MICE could resurrect room rates

Marina Bay Sands have signed up events for its Sands Expo and Convention Centre that will attract more attendees than its 2500-room hotel can accommodate. Tourist arrivals to Singapore in October have continued its uptrend while occupancy was at 83%. An increase in occupancy rates would help to lift unit-rates for ART’s properties in Singapore.

Shanghai expo could boost demand for lodging

The sponsor, Ascott Group, has 25 properties across 12 cities in China, including six that will open by 2011. In 2009 alone, four properties were opened in China, outlining the Group’s confidence in the Chinese market. Corporate spend and travel should improve in 2010 as Shanghai welcomes 70m visitors at World Expo 2010, which could benefit ART’s property in the city.

Forecasts below pre-crisis level – room for upside

The REVPAUs in ART’s key markets (Singapore, Vietnam, and China), as of 3Q09, are 15-44% below their peak a year ago. Our current forecasts reflect an average REVPAU growth of only 7% in 2010. Assuming that REVPAU in Singapore recovers to pre-crisis levels, FY10F DPU estimate could increase from 7.8 cts to 8.1 cts, offering a decent yield of 7.1%.

Potential equity-raising could be minimally dilutive

At 41.5%, ART’s gearing is the highest among the S-REITs, spurring the possibility of an equity issue. Recent private placements by Mapletree Logistics and Suntec REIT were done at discounts to trading prices of only 5.6-6.5%, which were minimally dilutive. Hence, ART could tap the equity market via placements in 2010 to fund its acquisitions or AEIs.

Valuations still attractive; Reiterate Buy

At 0.86x P/NAV, ART offers cheap and excellent exposure to premium hospitality assets at prime locations in fast-growing cities in Asia compared to CDLHT, which trades at 1.2x P/NAV. Management expects minimal downward revaluations of its properties. We reiterate our Buy, based on a total return of 21% from our target price of $1.29.

Not vested. From DBS:-

Besides leveraging on the IRs, we pick Ascott Residential Trust (ART), whose regional portfolio of serviced residence assets located at prime locations in key gateway cities in the Asia Pacific region, should also benefit from a pick-up in business travel.

We expect ART to deliver earnings growth of about 6% CAGR in FY10-11F on the back of higher average occupancies as business travel demand picks up in coming quarters.

Valuations are undemanding at 0.8x P/BV, offering FY10 yield of 6.7%

why even bother? small country...small market... counting pebbles....

Not vested. It's their regional portfolio that's interesting. I have stayed in a couple of their Serviced Apartments and it's well managed and sought after by the expats.

vested.

CIMB Squawk Box
Ascott Residence Trust (ART SP; S$1.33)

For those that missed out on CapitaLand’s run up this week, we highlight Ascott Residence Trust today as another alternative. To recap, earlier this week, CapLand announced that it will be acquiring seven sites in China from Orient Overseas Development for about S$3.1bn. This news is viewed positively by the market.

With Ascott Residence Trust (ART), we believe that upside surprises could come similarly from acquisitions. This acquisitions in 2010 are possible for three reasons:
1) indicative cap rates of serviced residences in emerging markets are above dividend yields of 6.0%, a level which could lead to DPU-accretive acquisitions;
2) ART has no lack of acquisition pipeline, with the first right of refusal to its parent’s Asia-Pacific assets which include majority and minority interests in 6,208 serviced residence units.; and
3) debt funding is available from a S$1bn MTN recently put in place.

Moreover, five of ART’s seven markets are in Asia, auguring well for its serviced apartments. A gradual global economic recovery led by Asia could catalyse ART’s revenue per available unit (REVPAU) growth, particularly in Singapore and the Philippines. We have assumed REVPAU growth of 5-30% for FY10-11 for these two markets.

The group will be announcing its FY09 result tomorrow, and as usual, there will be two quarters of DPU payout to be announced.

Technical Chart suggests BUY for Ascott Residence Trust . The stock is still tracking the uptrend channel from March. However, recently prices hit the resistance channel and failed to breakout. This is not a concern and we believe it is unlikely that it will derail this uptrend channel. Likely near the support trend line at S$1.23. Resistance is at S$1.41-S$1.43.

From Kim Eng -
Recovery almost priced in. Downgrade to hold from buy. Target price raised from $1.29 to $1.35.