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CDL Hospitality Trusts (CDREIT SP)

Awaiting Vaccine Shot; Upgrade To BUY


Upgrade to BUY from Neutral, new SGD1.25 TP from SGD1.03, 25% upside. Hospitality has been the industry hardest hit by the COVID-19 pandemic, but we expect visitor arrivals to rebound sharply when a vaccine is found. With the development of six vaccines being in advanced stages (more details here), and the gradual easing of travel restrictions, we believe a rebound in CDL Hospitality Trusts’ stock price is around the corner. It is attractively valued at 0.7x FY20 P/BV, and offers a c.7% FY21F yield.


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The worst is over


■ 1Q21 net losses (-S$43.7m) were wider than our -S$30m, forming 50%/69% of our and consensus FY21F. Revenue and associates were the key misses.

■ Staff costs declined 59% yoy and 44% qoq thanks to government grants in Singapore and Japan, 19% yoy cut in staff strength as well salary cuts.

■ SATS is the worst performing stock among the large cap FSSTI stocks. This could have priced in the structural challenges. Upgrade to Hold (TP: S$3.00).


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China Aviation Oil

Deep value at 1.5x FY20 ex-cash PE


Investment Thesis

Recommend BUY with TP of S$1.20 as the stock is trading at just 1.5x FY20 ex-cash PE with improving outlook. CAO has net cash of c. US$400m, representing 74% of its market cap, that it can utilize to fund accretive acquisitions.


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