♦ Conservative valuationConservative valuation

Hotel Properties Limited (HPL) is undervalued on account of its portfolio

of hotels and investment properties. We have a RNAV of S$3.05 based

on the revaluation of its key hotel assets (Hilton, Four Seasons and the

Le Meridien) and its investment properties in Singapore. Their hotels

overseas are more difficult to assess and we have valued them

conservatively at their book valuations.

♦ Redevelopment potentialRedevelopment potential

There is redevelopment potential for HPL?s Orchard Road sites which

include the Hilton, Four Seasons, Forum Shopping mall and the HPL

building in the future. Indeed, the URA has also indicated that it will

provide incentives for property owners in Orchard Road (e.g. higher plot

ratios and better usage of space, with access roads converted into

pedestrian malls and outdoor cafes). Including the piece of URA land

(for future sale) behind Hilton Hotel, these properties could provide

sizable prime land for commercial and residential redevelopment.

♦ Hotel operations should underpin growthHotel operations should underpin growth

The hotel operations in Singapore should see improvement in their

average room revenues (ARR) and occupancy rates due to the higher

tourist arrivals and the tight supply of hotel rooms in the next two years.

With the re-opening of the Four Seasons Resort at Kuda Huraa in

Maldives, we can also expect better results from its overseas hotel

operations.

♦ Looking out for prime developmentsLooking out for prime developments

HPL will continue to look to develop prime landbanks as it had done with

its Four Seasons Park and Nassim Jade developments. It is currently

developing the Robertson Blues condominium project along the

Singapore River. Overseas, it has The Met, Bangkok which is a luxury

370-unit high-rise condominium development in Bangkok?s CBD as well

as the Oasis Riviera condominium in Shanghai.

♦ Revaluation play ; BUYRevaluation play ; BUY

We have a target price of S$3.05 based on our conservative RNAV without

factoring the future redevelopment potential of its Orchard Road sites. The

stock is trading at a 18% discount to our target price. BUY.