sg equity analysts - uniphillip · 2015. 11. 11. · disclaimer: the information contained in this...
TRANSCRIPT
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.
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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
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.
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.
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.
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
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.
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
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.
5
First REIT Update –
Lippo to shift REIT listings to Indonesia?
Technical charts (available on report and Monday morning note)
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.
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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)
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.
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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)
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.
Hospitality Sector Looking for the rebound
Peter Ng
Investment Analyst
Phillip Securities Research
2 November 2015
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.
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.
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.
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
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.
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%
Source: CEIC, STB, PSR*RoW: Rest of World
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%
Source: CEIC, STB, PSR*RoW: Rest of World
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.
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
Source: CEIC, STB, PSR*RoW: Rest of World
Aug-14
Aug-15
0% 10% 20% 30% 40% 50%
Indonesia
China
Malaysia
India
Australia
*RoW
Source: CEIC, STB, PSR*RoW: Rest of World
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
Source: CEIC, STB, PSR*RoW: Rest of World
Aug-14
Aug-15
0% 10% 20% 30% 40% 50%
Indonesia
China
Malaysia
India
Australia
*RoW
Source: CEIC, STB, PSR*RoW: Rest of World
8M14
8M15
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.
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
Source: CEIC, STB, PSR %y-o-y, RHS
(60%)
(30%)
0%
30%
60%
90%
0.00
0.05
0.10
0.15
0.20
0.25
0.30
2013 2014 2015
Source: CEIC, STB, PSR %y-o-y, RHS
(30%)
(20%)
(10%)
0%
10%
20%
0.00
0.05
0.10
0.15
0.20
2013 2014 2015
Source: CEIC, STB, PSR %y-o-y, RHS
(10%)
0%
10%
20%
30%
0.00
0.05
0.10
0.15
2013 2014 2015
Source: CEIC, STB, PSR %y-o-y, RHS
(20%)
(10%)
0%
10%
20%
30%
0.00
0.05
0.10
0.15
2013 2014 2015
Source: CEIC, STB, PSR %y-o-y, RHS
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
Source: Bloomberg, PSR
SGDCNY Curncy
SGD depreciated
2.20
2.40
2.60
2.80
3.00
3.20
2012 2013 2014 2015
Source: Bloomberg, PSR
SGDMYR Curncy
SGD appreciated
35
40
45
50
55
2012 2013 2014 2015
Source: Bloomberg, PSR
SGDINR Curncy
SGD depreciated
0.60
0.70
0.80
0.90
1.00
1.10
2012 2013 2014 2015
Source: Bloomberg, PSR
SGDAUD Curncy
SGD appreciated
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.
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
Source: CEIC, STB, PSR %y-o-y, RHS
(60%)
(30%)
0%
30%
60%
90%
0.00
0.05
0.10
0.15
0.20
0.25
0.30
2013 2014 2015
Source: CEIC, STB, PSR %y-o-y, RHS
(30%)
(20%)
(10%)
0%
10%
20%
0.00
0.05
0.10
0.15
0.20
2013 2014 2015
Source: CEIC, STB, PSR %y-o-y, RHS
(10%)
0%
10%
20%
30%
0.00
0.05
0.10
0.15
2013 2014 2015
Source: CEIC, STB, PSR %y-o-y, RHS
(20%)
(10%)
0%
10%
20%
30%
0.00
0.05
0.10
0.15
2013 2014 2015
Source: CEIC, STB, PSR %y-o-y, RHS
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
Source: Bloomberg, PSR
SGDCNY Curncy
SGD depreciated
2.20
2.40
2.60
2.80
3.00
3.20
2012 2013 2014 2015
Source: Bloomberg, PSR
SGDMYR Curncy
SGD appreciated
35
40
45
50
55
2012 2013 2014 2015
Source: Bloomberg, PSR
SGDINR Curncy
SGD depreciated
0.60
0.70
0.80
0.90
1.00
1.10
2012 2013 2014 2015
Source: Bloomberg, PSR
SGDAUD Curncy
SGD appreciated
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.
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
Source: CEIC, STB, PSR %y-o-y, RHS
Singapore IVA had a 20-year CAGR of 4.0%; and more recently, a 10-year CAGR of 6.1%
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.
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
International Vis i tor Arriva ls (mn) 1.82 0.70 1.70 1.91 1.87 2.00 2.21 2.25
%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
International Vis i tor Arriva ls (mn) 2.52 2.50 2.25 2.26 2.53 2.65 2.69 2.84
%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)
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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%)
Source: Bloomberg, Singapore Tourism Board, Phi l l ip Securi ties Research (Singapore)
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%
Source: Bloomberg, Singapore Tourism Board, Phi l l ip Securi ties Research (Singapore)
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.
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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)
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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%.
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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$432.9 million accounted for 37% of Indian
spending.
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.
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21
Tourism Receipts (continued)
Figure 18. 2014 Tourism Receipts by Major Components Figure 19. 2014 Tourism Receipts (excl. SEG) by Markets
*Others include expenditure on airfares on Singapore-based carriers, port
taxes, local transportation, business, medical, education and transit visitors
Sightseeing, Entertainment & Gaming has been excluded in the country
analysis due to commercial sensitivity of information
Figure 20. 2014 Tourism Receipts by Major Components (excl. SEG), S$ bn
Sightseeing, Entertainment & Gaming has been excluded in the country
analysis due to commercial sensitivity of information
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
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
Sightseeing, Entertainment & Gaming has been excluded in the country
analysis due to commercial sensitivity of information
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
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
Sightseeing, Entertainment & Gaming has been excluded in the country
analysis due to commercial sensitivity of information
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
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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.
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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$)
92.1
75
80
85
90
95
2013 2014 2015
Source: CEIC, STB, PSR est.
(20%)
(15%)
(10%)
(5%)
0%
5%
10%
15%
0
50
100
150
200
250
300
2013 2014 2015
Source: CEIC, STB, PSR est. %y-o-y, RHS
(20%)
(10%)
0%
10%
20%
30%
0
50
100
150
200
250
300
2013 2014 2015
Source: CEIC, STB, PSR est. %y-o-y, RHS
Figure 21. Average Occupancy Rate (%) Figure 22. Average Room Rate (S$)
Figure 23. Revenue Per Available Room (S$)
92.1
75
80
85
90
95
2013 2014 2015
Source: CEIC, STB, PSR est.
(20%)
(15%)
(10%)
(5%)
0%
5%
10%
15%
0
50
100
150
200
250
300
2013 2014 2015
Source: CEIC, STB, PSR est. %y-o-y, RHS
(20%)
(10%)
0%
10%
20%
30%
0
50
100
150
200
250
300
2013 2014 2015
Source: CEIC, STB, PSR est. %y-o-y, RHS
Figure 21. Average Occupancy Rate (%) Figure 22. Average Room Rate (S$)
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
Source: CEIC, STB, PSR est. %y-o-y, RHS
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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.
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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)
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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 (%)
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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
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.
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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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