Should You Invest In Frasers Hospitality Trust [Fundamental Analysis]

In this article, we'll be conducting a fundamental analysis of Frasers Hospitality Trust and its suitability to achieve the following investment objective: To deliver a stable dividend yield of 5% to 6% per year while having high capital preservation ability.

Information Is Accurate Up To Feb 2024

Business Description

Frasers Hospitality Trust is a hospitality REIT that was listed in 2014 and owns 14 hotel properties across Singapore, Australia, United Kingdom, Germany, Japan and Malaysia.

What I Like About FHT:

The management has done a great job with their capital management and the balance sheet health is decent.

What I Do Not Like About FHT:

With all hospitality REITs, the dislike comes with regard to the cyclical nature of hospitality properties and also the unpredictability revolving around the post-COVID recovery.
Minimum master lease rental per unit has been on a decline post covid, thereby further intensifying the impact and cyclical risk of the property performances to unit holders. (Figure 12)

Updates From Recent Performance (1Q 2024)

General Comments:

International travel, though close, had yet recovered to pre-covid levels

Positive Headwinds:

RevPARs of all country portfolios were higher Y.O.Y except for SG & UK
International tourism is expected to recover to pre-pandemic levels in 2024 thereby providing a higher occupancy rate to FHT properties

Negative Headwinds:

SG RevPAR decreased 25.7% Q.O.Q and 16.6 Y.O.Y due to the easing of pent-up demand and the absence of large-scale events (i.e. F1)
Capital management ratio worsened slightly due to the impact of a higher cost of borrowing environment

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Daniel is a Licensed Independent Financial Consultant with MAS and a Certified Financial Planner (CFP®).

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