Distributable Income not surprisingly fell, by 31% y-o-y and 4.4% q-o-q to $17.38 mln in Q2. And as since Q4 ‘08, Income to be distributed was 9% lower at $15.82 mln or 1.89 cents per unit or 7.58 cents annualized. In Q2, $1.56 mln was retained for working capital purpose, vs $1.66 mln in Q1.

(When CDLHT announced that it was paying out only 79% of distributable income in Q4 ’08, the unit price was hit, albeit for a short while. We do not therefore expect the latest to adversely affect CDLHT’s unit price. Note that this is still consistent with CDLHT’s distribution policy of paying out at least 90% of its distributable income.)

Based on actual paid out in the 12 months to Jun ’09 of 9.08 cents, yield at $1.18 would be 7.7%. And based on the latest annualized DPU, the yield is 6.4%.

CDLHT’s financial position remains the strongest in the sector, with total borrowings of $293 mln, representing 19.2% of Total Assets as at end Jun ’09.
Note CDLHT has already secured $350 mln new financing earlier this year from DBS to more than pay off the entire sum due today, July 31st.

With the hospitality business reported to be witnessing some improvement, based on STB’s latest tourism report (after 11.5% decline in tourist arrivals in H1 ‘09 and looking ahead to the opening of the 2 integrated resorts next year), we believe Q2 could likely mark the bottom of the current cycle (Exhibit 2). As such, we maintain BUY, notwithstanding the strong unit price recovery since March.