Market Strategists - UniPhillip · Source: CEIC, STB, PSR *RoW: Rest of World 6M14 6M15. Disclaimer: The information contained in this document is intended only for use during the

Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.

Phillip Securities Pte Ltd (A member of PhillipCapital) Co. Reg. No. 197501035Z © PhillipCapital 2015. All Rights Reserved. For internal circulation only.

1

Market Strategists Kenneth Koh, Market & Equity Analyst

Soh Lin Sin, Macro | Equities Economist

SG & US Equity Analysts Richard Leow, Transport & Logistics

Dehong Tan, REITs

By Phillip Securities Research Mr. Chan Wai Chee, CEO

Mohamed Ghazali, Operations Exec

31st Aug 15, 8.15am/11.15am Morning Call/Webinar



2

Disclaimer

The information contained in this presentation has been obtained from public sources which Phillip Securities Pte Ltd (“PSPL”) has no reason to

believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the “Research”) contained in this

presentation are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or

warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any

such information or Research contained in this presentation is subject to change, and PSPL shall not have any responsibility to maintain the

information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be

liable for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made

available, even if it has been advised of the possibility of such damages.

This presentation is intended for general circulation only and does not take into account the specific investment objectives, financial situation or

particular needs of any particular person.

You should seek advice from a financial adviser regarding the suitability of the investment product, taking into account your specific investment

objectives, financial situation or particular needs, before making a commitment to invest in such products.



3

800 Super Holdings (BUY, TP:S$0.66, Last:S$0.47)

Trash delivers growth

2 Cents final dividend; 29.4% payout

4.3% yield, based on last close price

Sizeable contract by MHA is evidence of 800 Super's ability to deliver

quality service

South-West region Integrated Public Cleaning (IPC) contract and MHA

contract will propel revenue further in FY 2016

Biomass plant > better integration of the business and cost savings

Non-cyclical/defensive business model, resilient earnings and superior

ROE around low-twenties

Results at a glance

(SGD mn) FY15 FY14 y-y (%) Comments

Revenue 140.3 115.0 22.0 Award of new contracts and re-award of contracts at revised pricing

EBITDA 21.7 15.6 39.3

EBIT 14.6 11.1 31.6

PATMI 17.6 9.0 95.9

PATMI, adj. 12.2 9.0 35.6 Excluding S$5.4 million one-time gain from disposal of property

Source: Company, Phi l l ip Securi ties Research (Singapore)



Hospitality Sector State of the Industry: STB data for 2Q15

Richard Leow

Investment Analyst

Phillip Securities Research

31 August 2015



5

Snapshot for 2Q15

International visitor arrivals was flat

0.5% y-o-y decline to 3.62 million

Hotel key metrics of AOR, ARR and RevPAR were lower

Hoteliers lowered rates, due to flat visitor arrivals and over-supply of

new rooms

Strong rebound in Chinese tourist arrivals → 40% y-o-y

India has displaced Australia as the fourth largest market for 6M15

Singapore Tourism Statistics

Y/E Dec 2Q15 2Q14 y-y (%) Comments

International Vis i tor Arriva ls (mi l l ion) 3.62 3.64 (0.5)

Hotels

Average Occupancy Rate, AOR (%) 82.8 83.5 (0.7)ppt

Average Room Rate, ARR (S$) 240.80 255.30 (5.7) Hotel iers lowered rates , due to flat vis i tor

arriva ls and over-supply of new rooms

RevPAR (S$) 199.30 213.10 (6.5)

Source: Singapore Tourism Board, Phi l l ip Securi ties Research (Singapore) estimates



6

Outlook

2015 international visitor arrivals likely to experience negative growth

STB forecast of 0% to 3% growth

6M15 arrivals still down 3.4% y-o-y

2H15 need to grow 3.4% y-o-y (even higher than STB's 3% forecast) in

order to have a flat year

Relatively strong SGD key impediment to visitor arrival growth

Indonesia, Malaysia and Australia negative growth; weaker domestic

currency

Hoteliers expect competitive operating environment due to weak visitor

arrivals, soft corporate demand and upcoming supply of hotel rooms

Room CAGR 5.9% to 6% next three years

c.57,000 rooms as of end 2014

c.4,300, c.3,600, c.2,400 additional in 2015, 2016, 2017 respectively



7

Outlook

Hoteliers cited initiatives, attractions and events that should draw leisure

and corporate travellers

Marketing campaigns by STB

S$20 million joint campaign by SIA, STB, CAG; promote Singapore

as a leisure, business & MICE destination

Singapore Botanic Gardens → UNESCO World Heritage Site

Various sports events

OUE Singapore Open

WTA Finals

Formula 1 Grand Prix



8

International Visitor Arrivals

Visitor arrivals remain subdued with seven consecutive quarters of

flat/negative y-o-y growth

Flat 0.5% decline to 3.62 million, compared to 3.64 million in 1Q15

6M15 3.4% decline to 7.26 million, compared to 7.52 million in 6M15

Top five markets remained unchanged

But India has displaced Australia as the fourth largest market

Indonesia, Malaysia and Australia continue to be bogged down by

depreciation of domestic currency

Figure 1. Singapore Visitor Arrivals: Total (million)

(10%)

(5%)

0%

5%

10%

15%

20%

0.0

1.0

2.0

3.0

4.0

5.0

2Q

12

3Q

12

4Q

12

1Q

13

2Q

13

3Q

13

4Q

13

1Q

14

2Q

14

3Q

14

4Q

14

1Q

15

2Q

15

Source: CEIC, STB, PSR %y-o-y, RHS

Top five visitor contribution by nationality (million)

Y/E Dec 2Q15 2Q14 y-y (%) 6M15 6M14 y-y (%) Comments

Indonesia 0.68 0.78 (11.8) 1.32 1.53 (13.7)

China 0.44 0.31 40.0 0.95 0.87 8.9 Strong rebound from Chinese tourists

Malaysia 0.29 0.30 (4.5) 0.56 0.59 (5.2)

Australia 0.24 0.26 (7.5) 0.49 0.53 (7.2)

India 0.32 0.29 7.9 0.52 0.49 5.7 Continued growth from India

*RoW 1.64 1.69 (2.6) 3.42 3.51 (2.4)

Total 3.62 3.64 (0.5) 7.26 7.52 (3.4)

Source: Singapore Tourism Board, Phi l l ip Securi ties Research (Singapore)

*RoW: Rest of World



9


Visitors from India have displaced visitors from Australia for 6M15

1Q15: Australia: 6.9%, India: 5.6% vs. 1Q14: Australia: 7.0%, India: 5.1%

2Q15: Australia: 6.6%, India: 8.7% vs. 2Q14: Australia: 7.1%, India: 8.1%

6M15: Australia: 6.8%, India: 7.2% vs. 6M14: Australia: 7.0%, India: 6.5%

Figure 2. Visitors by Nationality, 2Q15 Figure 3. Visitors by Nationality, 6M15

Indonesia18.9%

China12.2%

Malaysia8.0%

India8.7%

Australia6.6%

*RoW45.5%

Source: CEIC, STB, PSR*RoW: Rest of World

Indonesia18.1%

China13.1%

Malaysia7.7%

India7.2%

Australia6.8%

*RoW47.1%


Figure 4. Visitor contribution by nationality, 2Q14 vs. 2Q15 Figure 5. Visitor contribution by nationality, 6M14 vs. 6M15

0% 10% 20% 30% 40% 50%

Indonesia

China

Malaysia

Australia

India

*RoW


2Q14

2Q15

0% 10% 20% 30% 40% 50%

Indonesia

China

Malaysia

Australia

India

*RoW


6M14

6M15



10


Strong rebound from Chinese tourists → 40% growth

Continued growth from Indian tourists → 7.9% growth Figure 6. Singapore Visitor Arrivals from Indonesia (million) Figure 7. Singapore Visitor Arrivals from China (million)

Figure 8. Singapore Visitor Arrivals from Malaysia (million) Figure 9. Singapore Visitor Arrivals from India (million)

Figure 10. Singapore Visitor Arrivals from Australia (million)

(20%)

(10%)

0%

10%

20%

0.0

0.2

0.4

0.6

0.8

1.0

2Q

12

3Q

12

4Q

12

1Q

13

2Q

13

3Q

13

4Q

13

1Q

14

2Q

14

3Q

14

4Q

14

1Q

15

2Q

15


(60%)

(40%)

(20%)

0%

20%

40%

60%

0.0

0.2

0.4

0.6

0.8

2Q

12

3Q

12

4Q

12

1Q

13

2Q

13

3Q

13

4Q

13

1Q

14

2Q

14

3Q

14

4Q

14

1Q

15

2Q

15


(10%)

(5%)

0%

5%

10%

15%

0.0

0.1

0.2

0.3

0.4

2Q

12

3Q

12

4Q

12

1Q

13

2Q

13

3Q

13

4Q

13

1Q

14

2Q

14

3Q

14

4Q

14

1Q

15

2Q

15


(10%)

0%

10%

20%

30%

0.0

0.1

0.2

0.3

0.4

2Q

12

3Q

12

4Q

12

1Q

13

2Q

13

3Q

13

4Q

13

1Q

14

2Q

14

3Q

14

4Q

14

1Q

15

2Q

15


(5%)

0%

5%

10%

15%

0.0

0.1

0.2

0.3

0.4

2Q

12

3Q

12

4Q

12

1Q

13

2Q

13

3Q

13

4Q

13

1Q

14

2Q

14

3Q

14

4Q

14

1Q

15

2Q

15




11


Domestic currency headwinds for Indonesia, Malaysia and Australia Figure 11. Price of 1 SGD in IDR Figure 12. Price of 1 SGD in CNY

(SGD appreciated against IDR over 12 months) (SGD depreciated against CNY over 12 months)

Figure 13. Price of 1 SGD in MYR Figure 14. Price of 1 SGD in AUD

(SGD appreciated against MYR over 12 months) (SGD appreciated against AUD over 12 months)

Figure 15. Price of 1 SGD in INR

(SGD depreciated against INR over 12 months)

6,000

7,000

8,000

9,000

10,000

11,000

2012 2013 2014 2015

Source: Bloomberg, PSR

SGDIDR Curncy

SGD appreciated

4.00

4.20

4.40

4.60

4.80

5.00

5.20

5.40

2012 2013 2014 2015


SGDCNY Curncy

SGD depreciated

2.20

2.40

2.60

2.80

3.00

2012 2013 2014 2015


SGDMYR Curncy

SGD appreciated

0.60

0.70

0.80

0.90

1.00

1.10

2012 2013 2014 2015


SGDAUD Curncy

SGD appreciated

35

40

45

50

55

2012 2013 2014 2015


SGDINR Curncy

SGD depreciated



12

Singapore Hotel Statistics

Average Occupancy Rate (AOR) for the quarter

was lower both y-o-y and q-o-q to 82.8%

0.7ppt lower than near-term low of 83.5%,

four quarters ago in 2Q14

Average Room Rate (ARR) sinks to lowest level

in four years

5.7% lower y-o-y to S$240.80: subdued

visitor arrivals exacerbated by over-supply

of new rooms

Revenue per Available Room (RevPAR)

6.5% lower y-o-y as a consequence of lower

AOR and ARR (contrast to flat visitor

arrivals), underlining the effect of over-

supply of rooms

Figure 16. Average Occupancy Rate (%)

Figure 17. Average Room Rate, ARR (S$)

Figure 18. Revenue Per Available Room, RevPAR (S$)

83.582.8

80

82

84

86

88

90

2Q

12

3Q

12

4Q

12

1Q

13

2Q

13

3Q

13

4Q

13

1Q

14

2Q

14

3Q

14

4Q

14

1Q

15

2Q

15

Source: CEIC, STB, PSR est.

(10%)

(5%)

0%

5%

10%

220

240

260

2802

Q1

2

3Q

12

4Q

12

1Q

13

2Q

13

3Q

13

4Q

13

1Q

14

2Q

14

3Q

14

4Q

14

1Q

15

2Q

15

Source: CEIC, STB, PSR est. %y-o-y, RHS

(10%)

(5%)

0%

5%

10%

180

200

220

240

2Q

12

3Q

12

4Q

12

1Q

13

2Q

13

3Q

13

4Q

13

1Q

14

2Q

14

3Q

14

4Q

14

1Q

15

2Q

15

Source: CEIC, STB, PSR est. %y-o-y, RHS



13

Sector Outlook

Pure-play Singapore Hospitality S-REITs have under-performed within the

sub-sector

Prices have clustered in three groups, declining 0%-3%, 10%-15% or

>20%.

Ascott REIT and Saizen REIT have come out relatively unscathed despite

market-wide sell-down

OUE-HT is in the second cluster and had about 10% decline in price

Far East-HT has been the worst performer, with 21% decline in price

Figure 19. Price performance since previous quarterly update (rebased)

0.7

0.8

0.9

1.0

1.1

Jun 2015 Jul 2015 Aug 2015

Source: Bloomberg, PSR18 Jun 2015 = 1.0

Ascott REITSaizen REITOUE-HTFrasers-HTAscendas-HTCDL-HTFar East-HT

Hospitality REITs peer relative data (arranged by Mkt. Cap.)

Mkt. Cap. (S$mn) Price (S$) P/NAV (x) yield (%)

1 Ascott Residence Trust 1,883 1.220 0.89 6.3

2 CDL Hospitality Trusts 1,291 1.310 0.81 7.2

3 OUE Hospitality Trust 1,099 0.825 0.92 7.4

4 Far East Hospitality Trust 1,062 0.595 0.62 7.8

5 Frasers Hospitality Trust 998 0.735 0.87 8.3

6 Ascendas Hospitality Trust 687 0.615 0.87 8.37 Saizen REIT 231 0.815 0.71 7.2

Average 0.81 7.5

Source: Bloomberg (Updated: 27 August 2015)



14

Headwinds for the Sector

Relatively strong SGD will be key impediment

Indonesia, Malaysia and Australia: lower visitor arrivals

Cautious business outlook, soft corporate-travel demand

Demand has been lower for corporate bookings, impact Meetings,

Incentives, Conferences and Exhibitions (MICE) segment

Over-supply of new hotel rooms

Muted visitor arrivals; pipeline of new rooms would exacerbate existing

supply-demand imbalance

Hoteliers lower prices to maintain occupancy; downward pressure on

RevPAR

High-end retail segment driven by tourist consumption remain challenging

9.3% plunge in TR from Shopping in 2014 attributable to lower visitor

arrivals (3% decline) and strengthening of SGD



15

Tailwinds for the Sector

Robust visitor arrivals from China and India

Strong rebound from China, continued growth from India

CAG offering reductions and rebates of aeronautical fees.

Passenger service charge, landing fees, catering & ground handling

Partnership between CAG and STB to invest in S$35 million marketing

campaign in key markets

Two-year campaign; targeting Australia, Indonesia, China & India

S$20 million marketing campaign by SIA, CAG & STB to promote leisure,

business & MICE destination

Two-year campaign; targeting Australia, China, Germany, Hong Kong,

India, Indonesia, Japan, Korea, New Zealand, the Philippines, Taiwan,

Thailand, Vietnam, the United States of America, and the United Kingdom



16

Investment Ideas

All other things being equal, expect pure-play Singapore Hospitality

REITs to under-perform peers with geographically diversified

portfolios

OUE Hospitality Trust, Far East Hospitality Trust

Favour Retail REITs with presence in heartland malls over those reliant

on Tourist Receipts from Shopping

Frasers Centrepoint Trust (Accumulate, Target Price: S$2.14, Last

close: S$1.975)

Exposure to growth in outbound Chinese tourists

Beijing Capital International Airport, HK: 694 (Accumulate, Target Price:

HK$9.23, Last close: HK$8.34)

Shanghai International Airport, SSE: 600009 (Accumulate, Target Price:

CNY29.00, Last close: CNY28.26)



17

Disclaimer

The information contained in this presentation has been obtained from public sources which Phillip Securities Pte Ltd (“PSPL”) has no reason to

believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the “Research”) contained in this

presentation are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or

warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any

such information or Research contained in this presentation is subject to change, and PSPL shall not have any responsibility to maintain the

information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be

liable for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made

available, even if it has been advised of the possibility of such damages.

This presentation is intended for general circulation only and does not take into account the specific investment objectives, financial situation or

particular needs of any particular person.

You should seek advice from a financial adviser regarding the suitability of the investment product, taking into account your specific investment

objectives, financial situation or particular needs, before making a commitment to invest in such products.



18

Market Strategists Kenneth Koh, Market & Equity Analyst

Soh Lin Sin, Macro | Equities Economist

SG Equity Analysts Richard Leow, Transport & Logistics

Dehong Tan, REITs

By Phillip Securities Research Mr. Chan Wai Chee, CEO

Mohamed Ghazali, Operations Exec

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Documents

Market Strategists - UniPhillip · Source: CEIC, STB, PSR *RoW: Rest of World 6M14 6M15. Disclaimer: The information contained in this document is intended only for use during the