CapitaLand Ascott Trust Balancing growth and stability

CapitaLand Ascott Trust reported strong financial performance with a 14% YoY increase in 2H DPU and a 16% YoY increase in full-year DPU. Improved operations and contributions from acquisitions drove revenue growth, especially in China and Vietnam.

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CapitaLand Ascott Trust – Higher financing costs

Despite higher financing costs, room rates supported RevPAU growth, with 4Q RevPAU surpassing pre-pandemic levels in key markets. Prudent capital management and a focus on portfolio reconstitution were highlighted, with a rise in gearing and debt costs.

Though there are potential support from one-off gains, CLAS remains cautiously optimistic about global travel recovery. Analysts maintain a BUY rating with a revised price target of SGD1.10.

Prudent capital management; focus on recycling Gearing was 37.9% vs. 35.2% in 3Q after the acquisitions. Cost of debt rose c.70bps YoY, 10bps HoH to 2.4%. Management guided for “higher” debt cost for FY24 with 18% of debt due to mature this FY.

Portfolio value rose 2% as stronger operating performance and outlook mitigated the impact of higher capitalization and discount rates. CLAS remains focussed on portfolio reconstitution.

Maintain BUY

Last fiscal year, CLAS divested SGD260m at exit yield of 4.3% while acquired SGD531m of assets at 6.2% yield. Further, it has pipeline of 8 planned asset enhancements to uplift the portfolio.

“We tweak our estimates factoring in recent acquisitions and placement. Combined with a lower discount rate, our TP rises 10% to SGD1.10. Notwithstanding potential support from one-off realized FX gains, the sequential RevPAU growth in 4Q is encouraging and perhaps, indicates the ongoing global travel recovery albeit at a slower pace. Maintain BUY,” writes Maybank.

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