CapitaLand Ascott Trust Maintains Growth Trajectory Despite Near-Term Headwinds, BUY Rating with S$1.08 Target Price August 11, 2026

CapitaLand Ascott Trust Maintains Growth Trajectory Despite Near-Term Headwinds, BUY Rating with S$1.08 Target Price

Steady Performance Amidst Portfolio Transformation

CapitaLand Ascott Trust, a leading hospitality real estate investment trust, delivered a resilient performance in the first half of FY26 despite facing operational challenges from its ongoing portfolio enhancement initiatives. The trust operates a diversified portfolio of serviced residences and hotels across key global markets, positioning itself as a premier hospitality accommodation provider.


Financial Performance Shows Stability

The trust reported a 1H26 distribution per unit (DPU) of 2.53 cents, remaining stable year-on-year and aligning with analyst estimates. This result represented 41% of the full-year forecast, with management expecting seasonally stronger performance in the second half. However, core DPU declined 10% year-on-year to 2.16 cents, primarily attributed to timing differences between acquisitions and divestments, income losses from properties undergoing asset enhancement initiatives (AEIs), foreign exchange fluctuations, and one-off tax adjustments. On a same-store basis, distributable income decreased 1% year-on-year.


Operational Metrics Reflect Mixed Trends

Revenue per available unit (RevPAU) for the second quarter declined 2% year-on-year to S$156, largely due to downtime from properties undergoing enhancement works in key markets. However, on a same-store basis, RevPAU demonstrated resilience with a 1% year-on-year increase, supported by improved operational efficiency and a notable 1 percentage point improvement in portfolio occupancy to 79%.


Future Growth Catalysts

Phillip Securities Research maintains a BUY recommendation with an unchanged dividend discount model-based target price of S$1.08. The research house maintains its FY26 DPU forecast of 6.1 cents, incorporating S$26 million in distribution top-ups to offset income losses from The Cavendish London AEI project. The firm expects low single-digit portfolio RevPAU growth driven by resilient room rates and higher occupancy levels.

Completed enhancement initiatives are expected to support long-term portfolio growth, with higher contributions anticipated from stabilised acquisitions. Notably, The Cavendish London post-AEI and Somerset Clarke Quay are projected to contribute a combined 0.16 cents to FY27 DPU, increasing to 0.21 cents in FY28 and 0.50 cents in FY29. At current levels, the shares offer an attractive FY26 dividend yield of 6.7%.


Frequently Asked Questions

Q: What was CapitaLand Ascott Trust's 1H26 DPU performance?

A: The trust delivered a 1H26 DPU of 2.53 cents, which was stable year-on-year and in line with estimates, representing 41% of the full-year forecast.

Q: Why did core DPU decline despite stable headline DPU?

A: Core DPU fell 10% year-on-year to 2.16 cents due to timing differences of acquisitions and divestments, income loss from assets undergoing AEIs, foreign exchange effects, and one-off tax adjustments.

Q: How did RevPAU perform in the second quarter?

A: 2Q26 RevPAU declined 2% year-on-year to S$156 due to downtime from properties undergoing AEIs, but increased 1% year-on-year on a same-store basis.

Q: What is Phillip Securities Research's recommendation and target price?

A: Phillip Securities Research maintains a BUY rating with an unchanged dividend discount model-based target price of S$1.08.

Q: What is the expected FY26 DPU forecast?

A: The research house maintains its FY26 DPU forecast of 6.1 cents, which is stable year-on-year and incorporates S$26 million of distribution top-ups.

Q: What future contributions are expected from key properties?

A: The Cavendish London and Somerset Clarke Quay are expected to contribute a combined 0.16 cents to FY27 DPU, rising to 0.21 cents in FY28 and 0.50 cents in FY29.

Q: What dividend yield does the current share price offer?

A: At the current share price, investors can expect an FY26 dividend yield of 6.7%.

CapitaLand Ascott Trust Maintains Growth Trajectory Despite Near-Term Headwinds, BUY Rating with S$1.08 Target Price

This article has been auto-generated using PhillipGPT. It is based on a report by a Phillip Securities Research analyst.

 

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