Date: October 2, 2024
Broker: Maybank Investment Bank Berhad

Overview
YTL Hospitality REIT (YTLREIT MK) is a prominent player in the hospitality REIT sector in Malaysia, with a portfolio of high-quality hotel assets. The REIT focuses on providing stable returns through its well-located properties, which benefit from strong tourist arrivals and consistent occupancy rates.

Stock Performance and Target Price

• Current Price (CP): MYR1.20
• Target Price (TP): MYR1.25
• Upside: 11%
• Market Capitalization: USD491 million
  YTL Hospitality REIT is rated as a HOLD, with a modest potential upside of 11%. The REIT continues to provide stable returns through its portfolio of well-performing hospitality assets.

Earnings Forecast and Dividend Yields

• 2024 Core Earnings Growth: 16.3%
• 2025 Core Earnings Growth: 14.4%
• 2024 Dividend Yield: 6.1%
• 2025 Dividend Yield: 6.9%

YTL Hospitality REIT’s earnings are expected to grow steadily in 2024 and 2025, reflecting strong occupancy rates in its hospitality assets. The REIT also offers attractive dividend yields, making it appealing for income-focused investors.

Occupancy Rates of Key Properties
YTL Hospitality REIT’s properties are well-positioned to capture demand from both domestic and international travelers. Its key assets benefit from high occupancy rates, contributing to stable revenue generation. The strong tourist arrivals projected for 2024 and beyond are expected to further support these occupancy levels.

Hospitality Segment Outlook
The hospitality sector is poised for recovery, with a projected increase in tourist arrivals driving demand for hotel stays. YTL Hospitality REIT is well-positioned to benefit from this trend, as its properties are located in prime tourist destinations. The REIT’s stable performance is supported by long-term leases and strong occupancy in its hotel portfolio, ensuring a consistent income stream.

Debt Profile and Financing Costs

• Total Debt: MYR2.322 billion
• Floating Rate Debt: 96% of total debt
• Gross Gearing: 43%

YTL Hospitality REIT has a high proportion of floating rate debt, exposing it to rising interest rates. However, its stable revenue base and consistent occupancy rates across its properties help mitigate the risks associated with higher financing costs.

Investment Thesis
YTL Hospitality REIT offers a compelling investment opportunity for those seeking exposure to Malaysia’s growing tourism and hospitality sector. Its portfolio of well-located hotels continues to perform well, supported by stable occupancy rates and long-term leases. While the REIT faces risks from floating rate debt, its strong earnings growth outlook and attractive dividend yields provide a solid foundation for investors.

This analysis summarizes YTL Hospitality REIT’s position and performance as of October 2, 2024.