SG Equity Analysts - UniPhillip · 2015. 11. 11. · Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated

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

SG Equity Analysts Soh Lin Sin, Consumer | Healthcare

Richard Leow, Transport | REITs (Industrial)

Dehong Tan, REITs

Peter Ng, Property Developers | Hospitality

By Phillip Securities Research Mr. Chan Wai Chee, CEO

Mohamed Ghazali, Operations Exec

2nd Nov 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

OSIM International Group

Downgrade to Neutral, Lower TP:S$1.44, Last:S$1.36

(SGD mn) 3Q15 3Q14 y-y Comments

Revenue 142 158 -11% Weak demand despite relaunch of uMagic

Operating EBITDA 15 27 -46% Legal costs , higher rental and wages

Profi t before tax 10 23 -56% Two new TWG startups

Profi t after tax 6 16 -65%

Interim dividend per share (cents) 1 1

Results at a glance

Headwinds

Weak demand across the board

(regional slowdown; currency turmoil)

Startup and operational costs, legal fees

weigh on profitability

What to expect?

Focus on TWG Tea business

Legal burden to moderate

Store rationalization plan intact

Cloudy outlook; Downgrade to “Neutral”;

lower TP of S$ 1.44 (Previous S$1.83)

-40%

-35%

-30%

-25%

-20%

-15%

-10%

-5%

0%

5%

4Q14 1Q15 2Q15 3Q15

Total

North Asia

South Asia

Rest of world

Revenue by Region (% YoY)Source: Company, PSR



4

First REIT Update –

Lippo to shift REIT listings to Indonesia?

Rationale:

•Tax Benefits (Finance Minister comments last week)

Implications involved:

•Lease structures in SGD

•Policy implementation risks

•Lower, more stable borrowing costs in SGD

- More mature REIT market, easy access to institutional investors, funding

•Fragmented shareholding structure

Risks to our investment thesis

•Slowdown in injection of assets

Maintain “ACCUMULATE” and target price of $1.49



5

First REIT Update –

Lippo to shift REIT listings to Indonesia?

Technical charts (available on report and Monday morning note)



6

SMRT Corp Ltd (Sell, TP:S$1.11, Last:S$1.46)

Rail maintenance-related expenses set to rise Results at a glance

(SGD mn) 2Q16 2Q15 y-y (%) 6M16 6M15 y-y (%) Comments

MRT 169.6 165.2 2.6 337.2 323.1 4.4 Higher ridership and average fare

LRT 2.7 2.5 7.5 5.3 4.9 7.1 Higher ridership and average fare

Bus 63.2 60.7 4.1 124.6 118.8 4.9 Higher ridership and average fare

Taxi 37.6 35.1 7.1 75.4 69.5 8.5 Larger and newer fleet

Rental 33.3 30.1 10.7 66.2 56.0 18.4 Contribution from Kal lang Wave Mal l

Advertis ing 11.0 9.4 17.3 19.8 18.7 5.5 Increased advertis ing on tra ins and buses

Engineering Services 3.5 3.7 (4.2) 5.9 6.5 (8.9) Completion of overseas consultancy projects

Other services 7.8 7.3 7.2 14.7 13.6 8.1 Higher charter revenue

Revenue 328.8 314.0 4.7 649 611 6.2 Broad based growth across most of the segments

EBITDA 83.7 80.2 4.3 162.4 154.4 5.2

Operating Profit/(Loss)

MRT (2.8) 7.6 N.M. (6.5) 12.6 N.M. Third consecutive quarterly loss

LRT (1.2) (0.7) N.M. (2.8) (1.3) N.M. Addition of new tra ins to the fleet

Bus 2.6 (1.4) N.M. 4.0 (7.0) N.M. Third consecutive quarterly profi t

Taxi 4.5 3.4 31.8 10.0 7.5 32.0

Rental 20.5 19.0 7.8 41.7 39.1 6.6

Advertis ing 7.4 5.2 42.7 12.3 10.8 13.9

Engineering Services (0.1) (0.9) N.M. (0.6) (0.8) (24.6) Profi t contribution from Singapore Rai l Engineering

Other services 0.8 0.5 74.3 1.3 1.0 35.3

EBIT 32.5 33.3 (2.4) 60.2 62.6 (3.9) Opex outpaced revenue growth

PATMI 25.7 25.3 1.9 45.9 47.6 (3.7) Favourable contribution from Shenzhen Zona

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



7

SMRT Corp Ltd (Sell, TP:S$1.11, Last:S$1.46)

Rail maintenance-related expenses set to rise

Rail MRE (includes Staff cost & Repair & Maintenance items) to rise 9ppts

41% of Rail revenue in 2Q FY16; will rise up to 50% from 3Q FY16 onwards

2Q FY16 Rail revenue = S$172.3 m; 9ppts → S$15.5mn EBIT erosion

Largest revenue contributor being squeezed from both ends; expect losses

in Rail business to continue

Dec-15: 1.9% fare reduction & cannibalisation from DTL2

Higher Rail MRE will compress margins → weaker 2H FY16

Rail EBIT-loss in 3Q & 4Q FY16 will be in excess of S$10mn each

Results at a glance

(SGD mn) 2Q16 2Q15 y-y (%) 6M16 6M15 y-y (%) Comments

Fare bus iness 235.5 228.4 3.1 467.1 446.9 4.5 Higher ridership and average fare

Non-Fare bus iness 93.2 85.5 9.0 182.0 164.3 10.8

Revenue 328.8 314.0 4.7 649.1 611.1 6.2 Broad based growth across most of the segments

EBITDA 83.7 80.2 4.3 162.4 154.4 5.2

Operating Profit/(Loss)

Fare bus iness (1.4) 5.5 N.M. (5.3) 4.4 N.M. Third consecutive quarterly loss

Non-Fare bus iness 33.1 27.2 21.8 64.6 57.6 12.2 Improved profi tabl i ty from Taxi , Rental and Advertis ing

EBIT 32.5 33.3 (2.4) 60.2 62.6 (3.9) Opex outpaced revenue growth

PATMI 25.7 25.3 1.9 45.9 47.6 (3.7) Favourable contribution from Shenzhen Zona

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



Hospitality Sector Looking for the rebound

Peter Ng

Investment Analyst

Phillip Securities Research

2 November 2015



Figure 1. Singapore Visitor Arrivals: Total (million)

(10%)

(5%)

0%

5%

10%

15%

20%

0.0

0.5

1.0

1.5

2.0

2013 2014 2015

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

9

International Visitor Arrivals (IVA)

6% y-o-y growth in August IVA; fourth consecutive month of y-o-y growth

July IVA reached an all-time-high of 1.52m with 7.7% y-o-y growth, surpassing the

previous high of 1.48m in Aug-13.

July and August IVA exhibit seasonality; Together with December, they are usually

the strongest months of the year.

While y-o-y growth in September would be a continuation of the momentum,

however, we are still expecting a m-o-m decline.

Growth in July and August is consistent with historical rates

IVA grew at 6.1% CAGR from 8.33m in 2004 to 15.10m in 2014.

Similar to y-o-y growth seen in Jul-15 and Aug-15 of 7.7% and 6.0% respectively.



10

IVA Growth driven by Chinese visitors

Strong growth in July and August was attributed to growth in Chinese visitors

Total IVA in Jul-15 increased by 110.1K y-o-y, while visitors from China increased by

66.2K.

Aug-15 total IVA increased by 81.8K y-o-y, while visitors from China grew by 92.9K.

Chinese visitors growth in Aug-15 offset by decline in visitors from Indonesia by 29.1K.

Top five visitor contribution by nationality (million)

Y/E Dec Jul-15 Jul-14 y-y (%) 7M15 7M14 y-y (%) Comments

Indones ia 0.306 0.297 2.9 1.62 1.82 (11.0)

China 0.247 0.181 36.6 1.20 1.05 13.7 Continued growth from ChinaMalays ia 0.102 0.101 0.9 0.664 0.694 (4.3)

India 0.084 0.073 15.2 0.604 0.565 6.9 Continued growth from IndiaAustra l ia 0.098 0.107 (8.5) 0.589 0.636 (7.4)

*RoW 0.683 0.650 5.1 4.10 4.16 (1.3)

Total 1.52 1.41 7.9 8.78 8.93 (1.6) Record-high monthly arrival

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

*RoW: Rest of World

Top five visitor contribution by nationality (million)

Y/E Dec Aug-15 Aug-14 y-y (%) 8M15 8M14 y-y (%) Comments

Indones ia 0.206 0.235 (12.4) 1.83 2.06 (11.2)

China 0.267 0.174 53.4 1.46 1.23 19.3 Record-high monthly arrivalMalays ia 0.089 0.093 (4.7) 0.753 0.787 (4.4)

India 0.077 0.070 10.3 0.681 0.635 7.3 Continued growth from IndiaAustra l ia 0.083 0.082 0.7 0.672 0.719 (6.5)

*RoW 0.723 0.708 2.0 4.83 4.86 (0.8)

Total 1.44 1.36 6.0 10.22 10.29 (0.6)

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

*RoW: Rest of World



11

IVA Market Share

No change in top five largest group of visitors by nationality

The five largest group of nationalities (Indonesia, China, Malaysia, India and Australia)

accounted for more than half of IVA.

Visitors from Rest of World (RoW) accounted for the rest.

Figure 2. Visitors by Nationality, Aug-15 Figure 3. Visitors by Nationality, 8M15

Indonesia14.2%

China18.5%

Malaysia6.1%

India5.3%

Australia5.7%

*RoW50.0%

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

Indonesia17.9%

China14.3%

Malaysia7.4%

India6.7%

Australia6.6%

*RoW47.2%


Figure 2. Visitors by Nationality, Aug-15 Figure 3. Visitors by Nationality, 8M15

Indonesia14.2%

China18.5%

Malaysia6.1%

India5.3%

Australia5.7%

*RoW50.0%


Indonesia17.9%

China14.3%

Malaysia7.4%

India6.7%

Australia6.6%

*RoW47.2%




12

IVA Market Share (continued)

Chinese and Indian tourists are increasing in market share

Total IVA for 8M15 was down 0.6% y-o-y.

BUT, visitors from China and India grew 19.36% y-o-y and 7.3% y-o-y, respectively.

They are gaining market share.

The strengthening of RMB and INR against SGD could have been the main driving

factor for higher growth of Chinese and Indian visitors.

Figure 4. Visitor contribution by nationality, Aug-14 vs. Aug-15 Figure 5. Visitor contribution by nationality, 8M14 vs. 8M15

0% 10% 20% 30% 40% 50% 60%

Indonesia

China

Malaysia

India

Australia

*RoW


Aug-14

Aug-15

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

Indonesia

China

Malaysia

India

Australia

*RoW


8M14

8M15

Figure 4. Visitor contribution by nationality, Aug-14 vs. Aug-15 Figure 5. Visitor contribution by nationality, 8M14 vs. 8M15

0% 10% 20% 30% 40% 50% 60%

Indonesia

China

Malaysia

India

Australia

*RoW


Aug-14

Aug-15

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

Indonesia

China

Malaysia

India

Australia

*RoW


8M14

8M15



13

Top 5 IVA and Currency Movement

Figure 6. Singapore Visitor Arrivals from Indonesia (million)

Figure 8. Singapore Visitor Arrivals from China (million)

Figure 10. Singapore Visitor Arrivals from Malaysia (million)

Figure 12. Singapore Visitor Arrivals from India (million)

Figure 14. Singapore Visitor Arrivals from Australia (million)

(40%)

(20%)

0%

20%

40%

0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

2013 2014 2015


(60%)

(30%)

0%

30%

60%

90%

0.00

0.05

0.10

0.15

0.20

0.25

0.30

2013 2014 2015


(30%)

(20%)

(10%)

0%

10%

20%

0.00

0.05

0.10

0.15

0.20

2013 2014 2015


(10%)

0%

10%

20%

30%

0.00

0.05

0.10

0.15

2013 2014 2015


(20%)

(10%)

0%

10%

20%

30%

0.00

0.05

0.10

0.15

2013 2014 2015


Figure 7. Price of 1 SGD in IDR

(SGD appreciated against IDR over 12 months)

Figure 9. Price of 1 SGD in CNY

(SGD depreciated against CNY over 12 months)

Figure 11. Price of 1 SGD in MYR

(SGD appreciated against MYR over 12 months)

Figure 13. Price of 1 SGD in INR

(SGD depreciated against INR over 12 months)

Figure 15. Price of 1 SGD in AUD

(SGD appreciated against AUD 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

3.20

2012 2013 2014 2015


SGDMYR Curncy

SGD appreciated

35

40

45

50

55

2012 2013 2014 2015


SGDINR Curncy

SGD depreciated

0.60

0.70

0.80

0.90

1.00

1.10

2012 2013 2014 2015


SGDAUD Curncy

SGD appreciated



14

Top 5 IVA and Currency Movement (continued)

Figure 6. Singapore Visitor Arrivals from Indonesia (million)

Figure 8. Singapore Visitor Arrivals from China (million)

Figure 10. Singapore Visitor Arrivals from Malaysia (million)

Figure 12. Singapore Visitor Arrivals from India (million)

Figure 14. Singapore Visitor Arrivals from Australia (million)

(40%)

(20%)

0%

20%

40%

0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

2013 2014 2015


(60%)

(30%)

0%

30%

60%

90%

0.00

0.05

0.10

0.15

0.20

0.25

0.30

2013 2014 2015


(30%)

(20%)

(10%)

0%

10%

20%

0.00

0.05

0.10

0.15

0.20

2013 2014 2015


(10%)

0%

10%

20%

30%

0.00

0.05

0.10

0.15

2013 2014 2015


(20%)

(10%)

0%

10%

20%

30%

0.00

0.05

0.10

0.15

2013 2014 2015


Figure 7. Price of 1 SGD in IDR

(SGD appreciated against IDR over 12 months)

Figure 9. Price of 1 SGD in CNY

(SGD depreciated against CNY over 12 months)

Figure 11. Price of 1 SGD in MYR

(SGD appreciated against MYR over 12 months)

Figure 13. Price of 1 SGD in INR

(SGD depreciated against INR over 12 months)

Figure 15. Price of 1 SGD in AUD

(SGD appreciated against AUD over 12 months)

6,000

7,000

8,000

9,000

10,000

11,000

2012 2013 2014 2015


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

3.20

2012 2013 2014 2015


SGDMYR Curncy

SGD appreciated

35

40

45

50

55

2012 2013 2014 2015


SGDINR Curncy

SGD depreciated

0.60

0.70

0.80

0.90

1.00

1.10

2012 2013 2014 2015


SGDAUD Curncy

SGD appreciated



15

IVA could be Rebounding…

MH370 incident sparked a decline in IVA

MH370 incident in Mar-14 caused IVA to

decline for 5 consecutive quarters.

Rate of decline has begun to ease, and see

signs that growth trajectory is resuming.

July's IVA; first clue that growth trajectory is

resuming

July IVA was a new record-high.

To establish a new high in a declining trend is

a meaningful signal of a potential rebound.

Previous rebounds showed: 1 quarter of y-o-y

growth for a signal, and a 2nd consecutive

quarter of y-o-y growth for confirmation.

Last 20 years, 3 periods when IVA bottomed

and then rebounded – 1999, 2003 and 2009.

Asian Financial Crisis (AFC), Severe Acute

Respiratory Syndrome (SARS) and the Global

Financial Crisis (GFC).

Figure 17. Singapore Visitor Arrivals: Total (million)

(30%)

(20%)

(10%)

0%

10%

20%

30%

40%

50%

0.0

5.0

10.0

15.0

20.0

199

4

199

5

199

6

199

7

199

8

199

9

200

0

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4


Singapore IVA had a 20-year CAGR of 4.0%; and more recently, a 10-year CAGR of 6.1%



16

IVA for the Past 3 Crises

4 – 5 quarters of decline before reverting back to growth

From the past three crises, y-o-y quarterly IVA declines

lasted for 4 to 5 quarters before reverting back to growth.

Quarterly International Visitor Arrivals recovery in 1999, 2004, 2010 and 2014

Jul-97: Asian Financial Crisis 3Q97 4Q97 1Q98 2Q98 3Q98 4Q98 1Q99 2Q99

International Vis i tor Arriva ls (mn) 1.90 1.61 1.53 1.53 1.61 1.58 1.67 1.66

%y-o-y 2.5% (14.4%) (19.8%) (14.5%) (15.4%) (1.8%) 9.3% 8.6%

Feb-03: SARS Outbreak 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04


%y-o-y (1.9%) (61.9%) (12.8%) (1.2%) 3.0% 186.6% 29.9% 17.6%

Sep-08: Lehman Collapse 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10


%y-o-y (4.5%) (7.8%) (13.6%) (9.3%) 0.3% 5.8% 19.6% 25.7%

Mar-14: MH370 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15

International Vis i tor Arriva ls (mn) 3.88 3.64 3.87 3.71 3.64 3.62

%y-o-y 0.0% (5.6%) (5.1%) (1.2%) (6.1%) (0.5%)

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



17

Scenario Analysis on IVA

Our scenario analysis shows 3Q15 IVA very likely to be y-o-y

growth.

Even our extreme bear-case of 12% y-o-y lower IVA in Sep-

15, would still result in 1.6% y-o-y growth for 3Q15.

Quarterly International Visitor Arrivals trend in 2014 and 2015

1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15

International Vis i tor Arriva ls (mn) 3.88 3.64 3.87 3.71 3.64 3.62

%y-o-y (0.0%) (5.6%) (5.1%) (1.2%) (6.1%) (0.5%)


Monthly International Visitor Arrivals trend in 3Q14 and 3Q15

Jul-14 Aug-14 Sep-14 Jul-15 Aug-15 Sep-15

International Vis i tor Arriva ls (mn) 1.41 1.36 1.10 1.52 1.44

%y-o-y (0.8%) (8.1%) (6.6%) 7.9% 6.0%


Scenario Analysis for 3Q15 y-o-y growth

Sep-15 %y-o-y growth (12.0%) (9.0%) (6.0%) (3.0%) 0.0% 3.0% 6.0%

3Q15 %y-o-y growth 1.6% 2.4% 3.3% 4.1% 5.0% 5.8% 6.7%

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

3Q15 data not available

yet.

Sep-15 data not available

yet, only Jul-15 and Aug-

15 data is available.

Scenario analysis with

Sep-15 %y-o-y growth as

input, and 3Q15 %y-o-y

growth as outcome.



18

Host of events likely to lift IVA through the rest of 2015

Calendar of events between Sep to Oct-15

Month Event Name

September Singapore International Festiva l of Arts 2015, Formula One Night Race,

Guys and Dol ls Mus ica l , Dylan Moran Live in Singapore, Sleeping Beauty on Ice,

Saturday Night Fever The Mus ica l , Muse Live in Singapore

October 2015 EMBAC Annual Conference, Singapore International Energy Week,

Gastech Singapore 2015, Asia Pacific Homeland Security,

Asia Downstream Week, Franchising & Licensing Asia,

FINA/ airweave Swimming World Cup 2015 Singapore,

Robbie Williams Let Me Entertain You Tour, Beyond the Barricade,

6th Singapore Diving International - FINA Diving Grand Prix 2015

November LEARNTech As ia 2015 Conference, APFHRM Regional HR Conference 2015,

Corporate Debt As ia , GreenUrbanScape As ia 2015,

International Skyrise Greenery Conference 2015,

TEDxSingapore, WTA Finals , The Liver Transplant Sympos ium, Susta inable Ocean Summit,

PowerLogis tics As ia 2015, CAPA As ia Aviation Summit,

The Bett As ia Leadership Summit, 18th Annual Shared Services & Outsourcing Week As ia

December International Conference on Soft Ground Engineering, CAD/CAM & Digital Dentistry,

12th Western Pacific Acoustics Conference 2015,

9th International Conference on Researching Work & Learning,

Singapore International Stone, Marble and Ceramic Show,

5th International Conference on Innovation & Enterprise,

3rd International Conference on Tourism and Hospitality Research,

International Premier Tennis League,

Human Resource Management and Professional Development in the Digital Age

Source: STB, Singapore.sg, Phi l l ip Securi ties Research (Singapore)



19

Risk to our view…

IVA growth has not been broad-based across markets

Remain optimistic on the resumption of the IVA growth trajectory

IVA growth driven mainly by 2 of the top 5 markets, China and

India.

Like to see IVA growth from a broader base of markets, or 2

consecutive quarters of growth of about 4% to 6%.



20

Tourism Receipts

Shopping and Accommodation are the two biggest components of

Tourism Receipts (TR) (excluding Sightseeing Entertainment and

Gaming) (SEG)

In 2014, Total TR was S$17.7 billion. Receipts from Shopping fell 10%

to S$4.12 billion in 2014, while Accommodation remained flat at $5.31

billion. Shopping and accommodation accounted for 17% and 22% of

total TR in 2014.

Indonesia and China visitors are the two biggest spenders. Indonesian

visitors spent S$2.95 billion (17%) in 2014, while the Chinese visitors

spent S$2.63 billion (15%).

China and India visitors are the two high-growth markets, and could

drive Shopping and Accommodation spending. TR from Shopping of

S$1.19 billion accounted for 45% of Chinese spending. TR from

Accommodation of S$432.9 million accounted for 37% of Indian

spending.



21

Tourism Receipts (continued)

Figure 18. 2014 Tourism Receipts by Major Components Figure 19. 2014 Tourism Receipts (excl. SEG) by Markets

*Others include expenditure on airfares on Singapore-based carriers, port

taxes, local transportation, business, medical, education and transit visitors

Sightseeing, Entertainment & Gaming has been excluded in the country

analysis due to commercial sensitivity of information

Figure 20. 2014 Tourism Receipts by Major Components (excl. SEG), S$ bn



Shopping17%

Accomodation22%

Food & Beverage

10%

Sightseeing, Entertainment

& Gaming25%

*Others26%

Source: CEIC, STB, PSR

Indonesia17%

China15%

India6%

Australia6%Japan

5%

Malaysia5%

*RoW46%

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

0.0 0.5 1.0 1.5 2.0 2.5 3.0

Indonesia

China

India

Australia

Japan

MalaysiaSource: CEIC, STB, PSR

Shopping Accomodation Food & Beverage Others









Shopping17%

Accomodation22%

Food & Beverage

10%


& Gaming25%

*Others26%


Indonesia17%

China15%

India6%

Australia6%Japan

5%

Malaysia5%

*RoW46%


0.0 0.5 1.0 1.5 2.0 2.5 3.0

Indonesia

China

India

Australia

Japan











Shopping17%

Accomodation22%

Food & Beverage

10%


& Gaming25%

*Others26%


Indonesia17%

China15%

India6%

Australia6%Japan

5%

Malaysia5%

*RoW46%


0.0 0.5 1.0 1.5 2.0 2.5 3.0

Indonesia

China

India

Australia

Japan





22

Singapore Hotel Operating Statistics

August Average Occupancy Rate (AOR) was higher y-o-y and q-o-q to

92.1%

1.5ppt higher than recent near-term high of 90.6% in Aug-14.

On an 8M15 basis, AOR is down 0.6ppt to 85.3% from 85.9% in 8M14, by

our estimates.

We think that SG50 celebrations was effective in drawing visitors.

Average Room Rate (ARR) in August saw 13th consecutive month of y-o-y

decline

Shift in consumer preference for mid-tier/economy rooms over

luxury/high-end rooms lowerered ARR.

Relatively strong SGD made visitors more budget-conscious, select mid-

tier/economy rooms instead of luxury/high-end rooms, lowering ARR by

2.7% y-o-y in Aug-15 to S$248.80.

On an 8M15 basis, ARR is down 5.4% y-o-y to S$243.00 from S$256.80

in 8M14, by our estimates.



23

Singapore Hotel Operating Statistics (continued)

Revenue per Available Room (RevPAR) was consequently lower due to lower ARR.

August RevPAR (S$229.30) was 1.0% lower y-o-y mainly due to the lower ARR

Despite the buoyant IVA and higher AOR.

For 8M15, RevPAR was down 6.0% y-o-y to S$207.30 from S$220.6 in 8M14.

Figure 21. Average Occupancy Rate (%) Figure 22. Average Room Rate (S$)

Figure 23. Revenue Per Available Room (S$)

92.1

75

80

85

90

95

2013 2014 2015

Source: CEIC, STB, PSR est.

(20%)

(15%)

(10%)

(5%)

0%

5%

10%

15%

0

50

100

150

200

250

300

2013 2014 2015

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

(20%)

(10%)

0%

10%

20%

30%

0

50

100

150

200

250

300

2013 2014 2015




92.1

75

80

85

90

95

2013 2014 2015


(20%)

(15%)

(10%)

(5%)

0%

5%

10%

15%

0

50

100

150

200

250

300

2013 2014 2015


(20%)

(10%)

0%

10%

20%

30%

0

50

100

150

200

250

300

2013 2014 2015




92.1

75

80

85

90

95

2013 2014 2015


(20%)

(15%)

(10%)

(5%)

0%

5%

10%

15%

0

50

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2013 2014 2015


(20%)

(10%)

0%

10%

20%

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0

50

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2013 2014 2015




24

Outlook for Hotel Room Supply-demand

A resumption of IVA growth trajectory would match upcoming supply of

rooms.

According to the Hospitality S-REITs, hotel room supply in Singapore is

estimated to grow at a CAGR of between 5.9% and 6.6% over the next

three years.

Similarly, IVA has historically grown at 20-year CAGR of 4.0%; and

more recently, a 10-year CAGR of 6.1%.

This suggests that the growth in IVA and rooms would potentially be

consistent with one another.



25

Recent Developments in the Sector

Ongoing negotiations between Airbnb and Urban Redevelopment

Authority (URA)

According to a news report on 14 October, Airbnb has been engaged in

talks with URA to define "clearer guidelines" on short term

accommodation in Singapore.

Should Airbnb be formally allowed to operate in Singapore, it could

potentially become a market disruptor.

STB ties up with Chinese media platforms to promote Singapore as a

tourism destination

On 21 October, STB had signed MOUs (lasting 2 to 3 years) with online

travel service providers (Alitrip and Tuniu), as well as social review sites

(Dianping and Mafengwo). (Source: Singapore Tourism Board Media

Release)

http://www.channelnewsasia.com/news/singapore/airbnb-in-talks-with-ura/2190752.htmlhttp:/www.channelnewsasia.com/news/singapore/airbnb-in-talks-with-ura/2190752.html



https://www.stb.gov.sg/news-and-publications/lists/newsroom/dispform.aspx?ID=616





26

Investment Ideas

Hospitality & Gaming: Genting SP (Not-rated; Resorts World Sentosa & newly

opened Genting Hotel Jurong).

Hospitality REITs: OUE Hospitality Trust (Not-rated; Mandarin Orchard

Singapore, Crowne Plaza Changi Airport, Mandarin Gallery), Far East

Hospitality Trust (Not-rated; portfolio of 8 hotels and 4 serviced residences in

Singapore).

Retail REITs with exposure to tourist spending: SPH REIT (Not-rated; 82.0%

of FY15 net property income from Paragon), Starhill Global REIT (Not-rated;

51.6% of FY15 net property income derived from Wisma Atria & Ngee Ann

City).

Hospita l i ty REIT OUE Hospita l i ty Trust (8.8) (10.8) 0.91 7.94

Far East Hospita l i ty Trust (17.2) (42.2) 0.70 7.16

Retai l REIT SPH REIT (9.6) (50.8) 0.99 5.82

Starhi l l Global REIT 2.5 (7.0) 0.90 6.23

Hospitality & Gaming Genting Singapore (24.5) (55.2) 1.36 1.23

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

Sector Company NameYTD Price

Performance (%)

Trailing 12M Net

Income (yoy %)P/B (X)

Distribution

Yield (%)



27

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

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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.



28

SG Equity Analysts Soh Lin Sin, Consumer | Healthcare

Richard Leow, Transport | REITs (Industrial)

Dehong Tan, REITs

Peter Ng, Property Developers | Hospitality

By Phillip Securities Research Mr. Chan Wai Chee, CEO

Mohamed Ghazali, Operations Exec

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SG Equity Analysts - UniPhillip · 2015. 11. 11. · Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated

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