Singapore Exchange Ltd (SGX)

Singapore Exchange is Asia’s leading and trusted market infrastructure, facilitating the exchange of capital and ideas to create value for people, businesses and economies. As a multi-asset exchange operating equity, fixed income and derivatives markets to the highest regulatory standards, SGX is a vertically integrated business that provides listing, trading, clearing, settlement, depository and data services.

With about 40% of listed companies and over 80% of listed bonds originating outside of Singapore as well as established linkages across the region and in Europe, SGX is Asia’s most international and connected exchange. Offering a full suite of derivatives products across Asian equity indices, commodities and currencies, SGX is the world’s most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN.

As Asia’s pioneering central counterparty, SGX is globally recognised for its risk management and clearing capabilities, and was one of the first globally to adopt the Principles for Financial Market Infrastructure.

Headquartered in AAA-rated Singapore, SGX has over 800 employees including offices in Beijing, Chicago, Hong Kong, London, New York, Mumbai, San Francisco, Shanghai and Tokyo.

Asia’s leading multi-asset exchange

SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Equity Bottom-Up

ARA US Hospitality Trust / Equity Bottom-Up

<p>COMPANY UPDATE</p>
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<h2>ARA US HOSPITALITY TRUST</h2>
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<p><strong>What doesn’t kill you makes you stronger</strong></p>
<ul>
<li><strong>Maintain OUTPERFORM with revised 12M TP of US$0.67</strong>. While 1Q20 numbers have remained largely intact, we expect 2Q20 to bear the brunt of ‘peak shutdown’, and 2H20 to present a stunted recovery. However, we remain optimistic on ARA’s portfolio’s ability to keep afloat.</li>
<li><strong>Cost flexibility associated with the select-service and extended-stay sector to keep margins buoyant.</strong> With 85% - 90% of variable costs, management has been diligent and proactive in implementing cost saving initiatives, saving up to US$143k per month as demand declines.</li>
<li><strong>Despite loan covenant waivers, property values may not recover in time.</strong> While demand may improve over the next year, we remain cautious as it may not be sufficient to support a RevPAR growth recovery – especially amid a recession, ongoing trade tensions, and a pending year-end election.</li>
</ul>
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<p><strong>1Q20 review</strong>. January and February saw initial signs of growth, before the Covid-19 pandemic hit. Both Occupancy and RevPAR were on uptrends, from 60% to 67% and US$67 to US$78 respectively. However, in line with the overall US hotel industry trend and as a result of the Covid-19 pandemic, March figures declined steeply. On the brighter side of things, ARA’s portfolio managed to maintain still, though marginally, a higher RevPAR index – pointing to a slight outperformance of its peers.</p>
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COMPANY UPDATE

ARA US HOSPITALITY TRUST

What doesn’t kill you makes you stronger

Maintain OUTPERFORM with revised 12M TP of US$0.67. While 1Q20 numbers have remained largely intact, we expect 2Q20 to bear the brunt of ‘peak shutdown’, and 2H20 to present a stunted recovery. However, we remain optimistic on ARA’s portfolio’s ability to keep afloat.
Cost flexibility associated with the select-service and extended-stay sector to keep margins buoyant. With 85% - 90% of variable costs, management has been diligent and proactive in implementing cost saving initiatives, saving up to US$143k per month as demand declines.
Despite loan covenant waivers, property values may not recover in time. While demand may improve over the next year, we remain cautious as it may not be sufficient to support a RevPAR growth recovery – especially amid a recession, ongoing trade tensions, and a pending year-end election.


1Q20 review. January and February saw initial signs of growth, before the Covid-19 pandemic hit. Both Occupancy and RevPAR were on uptrends, from 60% to 67% and US$67 to US$78 respectively. However, in line with the overall US hotel industry trend and as a result of the Covid-19 pandemic, March figures declined steeply. On the brighter side of things, ARA’s portfolio managed to maintain still, though marginally, a higher RevPAR index – pointing to a slight outperformance of its peers.




ARA US Hospitality Trust: What Doesn’t Kill You Makes You Stronger