Broker's take: DBS Equity Research maintains 'buy' on Frasers Hospitality Trust

DBS Equity Research in a report on Monday reiterated its "buy" call on shares of Frasers Hospitality Trust (FHT), with a target price of S$0.94.

FHT's maiden results for the period of July 14 - Dec 31, 2014 were in line with expectations, said analysts Mervin Song, Derek Tan and Rachael Tan in the report.

FHT's distribution per unit (DPU) of 2.97 Singapore cents (which includes as yet un-repatriated income from Japan) beat IPO (inital public offering) forecasts by 5.3 per cent, the report noted. Its revenue of S$50 million was in line with IPO forecasts and its net profits interest of S$42 million was 2.3 per cent higher, due to lower property expenses.

In addition, its Singapore revenue per available room (RevPAR) of S$267 was higher than the S$259 IPO forecast, as InterContinental Hotel benefitted from higher occupancies during the F1 and peak period. This was partially offset by weaker contribution from Fraser Suites Singapore, which saw pressure from a softening rental market, tighter labour policy, and lower corporate housing allowance.

The trust's Japanese, Australian and UK properties also recorded higher occupancies, which resulted in better-than-expected RevPAR of 10,296 yen (vs 9,908 yen in forecasts), A$183 (vs A$173) and 103 pounds (vs 94 pounds) respectively. Malaysia however, was below expectations (RevPAR of RM352 vs RM392 in forecasts), as the Malaysia Airlines aviation disasters impacted demand.

FHT's year-to-date performance is encouraging, said the report. "Going forward, the trust's geographical diversification should see balanced and stable income through the remaining quarters, as the peak seasons of each geographical region are fairly evenly spread throughout the year."