CDL-HT’s 1H14 DPU was largely in line, at 46% of our full-year forecast. Although 2Q was a weak quarter, management indicated that 2H should be more positive. Coupled with fewer hotels coming online in FY14 and more events in 2H,we retain our positive view of this sub-sector and our Add rating for CDL-HT. But we are lowering our FY14-16 DPU forecasts by 1.9-4.9% in view of a slow corporate spending recovery and Chinese arrivals, leading to a slightly lower DDM-based (discount rate: 8.3%) target price of S$1.88.
China developers’ historical 12-month rolling P/E chart
The China Property sector has risen 19% from a trough in late-June. After this week’s rally, the China Property sector finally recovered the loss from the beginning of the year, and is flat year-to-date. Money rotated out of names such as Greentown, COGO, Country Garden, CR Land, etc, and moved into Vanke, KWG, SUNAC, COLI, Kaisa, etc., reflecting that stock-picking is still a very important element in the sector.
■ This report reviews the asset allocation (end June) and performance of major emerging market funds (to 23 July). A consensus overweight market is one in which there are more funds meaningfully overweight relative to those that are meaningfully underweight (>2% below index weight). The maximum, minimum and quartile cut-off positions are shown in Tables 1 to 3.