‘Beat estimates’: RHB upgrades CDL Hospitality Trusts to ‘buy’ on improved earnings, bright sector outlook

[SINGAPORE] RHB has upgraded its call on CDL Hospitality Trusts (CDLHT) to “buy” from “neutral”, following improved earnings and a positive sector outlook.

The bank also lifted its target price for CDLHT by 13.6 per cent to S$1.00, from S$0.88 previously.

The revision comes as the trust’s earnings for the second half of FY2025 “beat estimates”, with a strong performance for its Singapore and New Zealand segment, said RHB in a report on Monday (Feb 2). CDLHT on Friday reported a 3.5 per cent year-on-year increase in net property income to S$71.1 million for H2 ended Dec 31, 2025.

CDLHT could see a rebound in the price of its stapled securities, as well as benefit from a brighter outlook for the Singapore hospitality sector in 2026, said RHB analyst Vijay Natarajan.

“We expect Singapore’s hospitality sector to continue its recovery in 2026, aided by a healthy event pipeline, resilient economy and moderating supply.”

He added: “Sharply lower interest costs and incremental contributions from its UK living sector assets provide added tailwinds.”

Noting that the price of CDLHT’s stapled securities has underperformed over the last 12 months, Natarajan believes there is “room for a rebound”, with the counter trading at a price-to-book value of around 0.6 times.

Outlook for 2026

As the outlook for Singapore’s hospitality sector brightens in 2026, CDLHT’s revenue per available room (RevPAR) could grow by 3 to 5 per cent on the year in 2026, RHB estimates.

This forecast growth could be driven by higher visitor arrivals from a stronger event and concert pipeline, and moderate hotel supply.

Natarajan noted that the Moxy Singapore Clarke Quay, a 475-key lifestyle offering in CDLHT’s pipeline, is expected to be completed by end-2026.

“CDLHT has committed to a forward purchase upon the completion from the sponsor, for S$475 million or 110 per cent of development costs (whichever is lower) – a highly attractive price compared to that recorded in recent transactions,” he said.

In terms of overseas markets, CDLHT’s Australia and New Zealand assets are expected to register stronger performance following recent hotel renovations and stronger demand outlook.

Its UK living sector assets are also expected to deliver higher income, although its Maldives portfolio is likely to “remain a drag” due to a competitive environment. Meanwhile, its assets in Italy and Germany are likely to continue to post “flattish” numbers.

Amid higher contributions from its assets in Singapore, the UK and New Zealand, alongside lower interest costs, RHB expects CDLHT to record an 8 per cent distribution per stapled security (DPS) growth for FY2026.

The bank has raised its DPS forecast for CDLHT by 2 per cent and 4 per cent for FY2026 and FY2027, respectively, from its previous estimates. This is after factoring in lower interest rates and adjusting RevPAR growth assumptions for its Singapore assets.