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PR Newswire
02-07-2014, 09:53 AM
FHT, Lim&Tan noted:
While the strong 21x subscription rate (for the international
placement tranche of 139.6mln shares at 88 cents) for Frasers
Hospitality Trust’s (FHT) initial public offering could see a decent
debut for the Trust next week, we note that at its indicative
annualized yield of 6.9% for this year and 7% next year, it is little
different from its peers such as Ascott Residence Trust’s 6.6% this
year and 6.9% next year, CDL REIT’s 6.3% and 6.8% and Far
East Hospitality’s 6.4% and 6.8%.
And while FHT’s yield is slightly better than its peers, we note that
its price to book of 1.06x is also slightly ahead of its peer average
of just below 1x while its gearing of 41.6% it also ahead of its peer’s
average of 35%. While its pipeline of potential injections from its
sponsors are strong at more than 10 properties, we note that
based on management’s guidance of a long term gearing target
of 40%, it means that potential acquisitions would result in DPU
dilution from the issue of new units. In addition, the rising interest
rate concerns over the next few years would be a dampener given
its relatively high gearing ratio.
Given these factors, fundamentally, we are pretty “neutral” on FHT
as its valuations are not much different from sector peers but the
strong 21x subscription rate for its international placement tranche
could present investors with an opportunity to “Stag” the IPO.
While the strong 21x subscription rate (for the international
placement tranche of 139.6mln shares at 88 cents) for Frasers
Hospitality Trust’s (FHT) initial public offering could see a decent
debut for the Trust next week, we note that at its indicative
annualized yield of 6.9% for this year and 7% next year, it is little
different from its peers such as Ascott Residence Trust’s 6.6% this
year and 6.9% next year, CDL REIT’s 6.3% and 6.8% and Far
East Hospitality’s 6.4% and 6.8%.
And while FHT’s yield is slightly better than its peers, we note that
its price to book of 1.06x is also slightly ahead of its peer average
of just below 1x while its gearing of 41.6% it also ahead of its peer’s
average of 35%. While its pipeline of potential injections from its
sponsors are strong at more than 10 properties, we note that
based on management’s guidance of a long term gearing target
of 40%, it means that potential acquisitions would result in DPU
dilution from the issue of new units. In addition, the rising interest
rate concerns over the next few years would be a dampener given
its relatively high gearing ratio.
Given these factors, fundamentally, we are pretty “neutral” on FHT
as its valuations are not much different from sector peers but the
strong 21x subscription rate for its international placement tranche
could present investors with an opportunity to “Stag” the IPO.