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What Investors Should Know About Frasers Hospitality Trust’s Latest Earnings and Valuation

Frasers Hospitality Trust (SGX: ACV) is a stapled trust that comprises a real estate investment trust and business trust. Its investment focus is on hotels and serviced residences around the world. As of 30 September 2017, its portfolio consisted of 15 properties located across nine cities in Asia, Australia, and Europe.

There are two things about the REIT that investors may want to know about right now: Its latest financial performance and valuation.

Financial performance

Here’s a table showing important items from Frasers Hospitality Trust’s financial performance for the fourth quarter of its financial year ending 30 September 2017 (FY2017).


Source: Frasers Hospitality Trust FY2017 fourth quarter earnings presentation

We can see that Frasers Hospitality Trust delivered a good performance in the reporting quarter.

The trust had benefitted from the addition of Novotel Melbourne on Collins (the trust acquired the property in late 2016), and stronger performances in most geographies, except for Singapore and Japan. A lower daily average rate at Fraser Suites Singapore led to Frasers Hospitality Trust’s poorer performance in Singapore. Japan, on the other hand, suffered from lower banquet revenue at ANA Crown Plaza Kobe.

Eu Chin Fen, the chief executive officer of Frasers Hospitality Trust’s manager, gave a good summary of the trust’s latest quarterly performance in the latest earnings:

“We are pleased to report a commendable set of results for FY2017. Overall, our portfolio performance has been resilient, underpinned by the addition of Novotel Melbourne on Collins and Maritim Hotel Dresden. All country portfolios recorded higher gross operating profit except for Singapore which reported flat growth despite soft market conditions and new supply.”

In sum, it was a good quarter from the trust, with the exception of its businesses in Singapore and Japan.

Valuation

There are two useful valuation metrics for assessing REITs. They are the price-to-book (PB) ratio, and the distribution yield.

The table below shows Frasers Hospitality Trust’s PB ratio and distribution yield. It also shows the respective averages for the two valuation metrics for the X REITs that are in Singapore’s stock market.


Source: SGX Stock Facts

We can see that Frasers Hospitality Trust is trading at a discount to the market average given its lower PB ratio and higher distribution yield.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.