Brokers' take: CDLHT downgraded to 'hold', 'neutral' as it trades closer to long-term mean

ANALYSTS from CGS-CIMB and RHB have downgraded CDL Hospitality Trusts (CDLHT) to "hold" and "neutral" respectively as the stapled group trades closer to its long-term mean.

CGS-CIMB downgraded CDLHT to "hold" from "add", with a raised target price (TP) of S$1.24 from S$1.16. It believes recovery remains volatile, and valuation has recovered back to a near five-year mean of 0.97 times price to book (P/BV).

RHB downgraded the stock to "neutral" from "buy" with an unchanged TP of S$1.25. It said that positives are now mostly priced in, with CDLHT trading at 0.9 times P/BV, closer to its long-term mean.

"Near-term price performance should remain range bound with a further rebound likely only upon actual commencement of global travel, which in our view is only possible closer to year-end," RHB's research team said.

Meanwhile, DBS maintained its "buy" call on CDLHT, with a slightly lowered TP of S$1.35 from S$1.40 previously. DBS cut its TP after tweaking its earnings estimates for hotels in Europe and Australia. The research team believes the stapled group remains on track to ride the travel demand recovery in 2021 and beyond.

"With the vaccine distribution programme underway and the upcoming Tokyo Olympics in H2 2021, we should see a synchronised recovery across CDLHT's portfolio when the travel bug returns," the DBS's analysts said.

CDLHT's FY2020 distribution per unit (DPU) of 4.95 Singapore cents was above expectations for CGS-CIMB and a surprise for DBS. The stapled group's DPU was 140 per cent of CGS-CIMB's full-year forecast.

CGS-CIMB raised its FY2021-22 forecast DPU by 6-15 per cent to factor in capital distribution. The stapled group has undistributed capital of about S$60 million - which the research team believes will be topped up to buffer impact from the Covid-19 pandemic.

RHB has revised its FY2021-22 forecast core DPU lower by 5-14 per cent but slightly raised its forecast for FY2024.

Stapled securities of CDLHT closed at S$1.22 on Monday, down 0.8 per cent or S$0.01.