OCBC Investment Research lowered its target price on Singapore’s CDL Hospitality Trusts to $1.79 from $2.05 but kept its ‘hold’ rating, citing weaker revenue per available room (RevPAR) projections in Singapore.
CDL units were up 0.55% at $1.83 versus a 0.8% gain in the benchmark Straits Times Index on Friday. The stock has fallen about 3% so far this year.
From January to April, RevPAR for Singapore hotels fell 2.6% from a year earlier to $218 , OCBC said, adding visitor arrivals are converting into fewer room nights on a per capita basis.
OCBC forecast hotel room demand growth of 5.4% per year from 2013 to 2015, lower than the projected 5.8% per annum increase in room supply.
“Concerned with an oversupply situation building up in the hospitality market and generally weak performance of the industry year-to-date, we are lowering our FY13 RevPAR growth assumption for CDLHT’s Singapore hotels from 0% to -5%,” OCBC said.
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