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SINGAPORE (Oct 14): Ascott Residence Trust (ART) could benefit from parent CapitaLand’s recent tie-up with Tujia, dubbed China’s answer to Airbnb, says UOB Kay Hian lead analyst Derek Chang in a Oct 14 report which has a “buy’ on ART with S$1.37 target price.
“We reckon this could allow ART to leverage on Tujia’s global reach (about 430,000 listings in China, Bangkok, Singapore, Tokyo and South Korea) and expertise to scale up its online presence, enhancing its booking platform and back-end support,” says Chang.
As for the impact of online home-rental platforms, ART’s management says its serviced residences and hotels, which provide security, concierge services and F&B outlets, cater more to corporate clientele while websites like Airbnb appeal more to price-sensitive leisure travellers.
At present, ART’s debt headroom remains limited with gearing at 41%, so to finance potential acquisitions, Cheng says equity fund raising is likely.
“We also do not rule out capital recycling through potential divestments of non-core assets. This could likely include rental housing assets in Japan where six were divested last year, underperforming China assets or even assets in France with expiring master leases,” adds the analyst.
Although management has previously highlighted the likelihood of footprint expansion in the US, Cheng notes that sponsor Ascott has been acquiring assets in Germany and Paris. These could require 6-9 months to see performance stabilise before potential injection of these assets into ART.
Units of ART are down 0.5 cent at S$1.135. — theedgemarkets.com.sg
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