SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Asia’s leading multi-asset exchange

Singapore Exchange Ltd (SGX)

Singapore Exchange is Asia’s leading and trusted market infrastructure, facilitating the exchange of capital and ideas to create value for people, businesses and economies. As a multi-asset exchange operating equity, fixed income and derivatives markets to the highest regulatory standards, SGX is a vertically integrated business that provides listing, trading, clearing, settlement, depository and data services.

With about 40% of listed companies and over 80% of listed bonds originating outside of Singapore as well as established linkages across the region and in Europe, SGX is Asia’s most international and connected exchange. Offering a full suite of derivatives products across Asian equity indices, commodities and currencies, SGX is the world’s most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN.

As Asia’s pioneering central counterparty, SGX is globally recognised for its risk management and clearing capabilities, and was one of the first globally to adopt the Principles for Financial Market Infrastructure.

Headquartered in AAA-rated Singapore, SGX has over 800 employees including offices in Beijing, Chicago, Hong Kong, London, New York, Mumbai, San Francisco, Shanghai and Tokyo.

Equity Bottom-Up

<p>Non- SGX Report: These equity research reports are not written by the SGX.&nbsp;SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.</p>
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<p>Singapore Company Update</p>
<h2>Far East Orchard Limited</h2>
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<h3>Poised to rerate as earnings bottom</h3>
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<h3>Investment Thesis:</h3>
<p><strong>Deep value and compelling reasons to trade higher.</strong> Far East Orchard (FEOR) is currently trading at a TTM P/B multiple of 0.41x, at a deep discount to its hospitality peers (0.82x), PBSA peers (0.66x), and historical average (-0.43 S.D. of its 4-year historical mean). As FEOR pivots away from the lumpy residential business into recurring income-focused businesses (Hospitality and PBSA), we believe that earnings volatility will minimise and the stock should re-rate higher.</p>
<p>Aims to be a significant PBSA player; EBIT from PBSA to grow at a CAGR of 21.6%. FEOR plans to expand the number of PBSA beds from 3,561 to 5,000 in 2025. This asset class has shown resilience against economic downturns and we believe that this segment will be FEOR’s main growth engine in the next few years. We project its EBIT to grow at a CAGR of 21.6% from FY20-25F.</p>
<p><strong>Recovery at its hospitality segment to boost earnings in FY21/22F.</strong><br>We believe that the gradual return of leisure travel in Singapore is imminent with Singapore’s high vaccination rate and its ongoing discussions to establish travel corridors. FEOR aims to add c.8,500 hotel rooms by 2025 and based on our estimates, it could translate to c.S$32m and c.S$7m of additional revenue and EBIT respectively.</p>
<p><strong>Valuation:</strong><br>Maintain BUY and TP of S$1.70. Our TP is based on a blend of its 10-year DCF valuation (5.14% WACC, 2% terminal growth) followed by a 10-year transition using the H-Model, and 0.60x FY21F P/B multiple.</p>
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Non- SGX Report: These equity research reports are not written by the SGX.&nbsp;SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.



Singapore Company Update
Far East Orchard Limited



Poised to rerate as earnings bottom



Investment Thesis:
Deep value and compelling reasons to trade higher. Far East Orchard (FEOR) is currently trading at a TTM P/B multiple of 0.41x, at a deep discount to its hospitality peers (0.82x), PBSA peers (0.66x), and historical average (-0.43 S.D. of its 4-year historical mean). As FEOR pivots away from the lumpy residential business into recurring income-focused businesses (Hospitality and PBSA), we believe that earnings volatility will minimise and the stock should re-rate higher.
Aims to be a significant PBSA player; EBIT from PBSA to grow at a CAGR of 21.6%. FEOR plans to expand the number of PBSA beds from 3,561 to 5,000 in 2025. This asset class has shown resilience against economic downturns and we believe that this segment will be FEOR’s main growth engine in the next few years. We project its EBIT to grow at a CAGR of 21.6% from FY20-25F.
Recovery at its hospitality segment to boost earnings in FY21/22F. We believe that the gradual return of leisure travel in Singapore is imminent with Singapore’s high vaccination rate and its ongoing discussions to establish travel corridors. FEOR aims to add c.8,500 hotel rooms by 2025 and based on our estimates, it could translate to c.S$32m and c.S$7m of additional revenue and EBIT respectively.
Valuation: Maintain BUY and TP of S$1.70. Our TP is based on a blend of its 10-year DCF valuation (5.14% WACC, 2% terminal growth) followed by a 10-year transition using the H-Model, and 0.60x FY21F P/B multiple.










(Non-SGX Report) Far East Orchard Limited: Poised to Rerate as Earnings Bottom

<p><em><strong>Non- SGX Report: These equity research reports are not written by the SGX.&nbsp;</strong>SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.</em></p>
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<p>Singapore Company Focus</p>
<h2>Far East Orchard Limited</h2>
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<h3>Deep value within</h3>
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<li>Deep value and compelling reasons to trade higher&nbsp;</li>
<li>EBIT from PBSA will grow at a CAGR of 19.6%</li>
<li>Nearing a comeback for its hospitality segment</li>
<li>We initiate coverage with BUY and TP of S$1.70</li>
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<p><strong>Deep value and compelling reasons to trade higher.</strong> Far East Orchard (FEO) is currently trading at a TTM P/B multiple of 0.40x, which is at a discount to its hospitality peers (0.81x), PBSA peers (0.64x), and historical average (-0.54sd of its 4-year historical mean). With a pivot away from lumpy residential business into more recurring income focus from its hospitality and PBSA portfolio, we believe that earnings volatility will be greatly minimized. With greater earnings visibility, we expect the group to return to a “REIT-like” payout of 6 scts/share in FY22F, translating to a yield of c.5.5%.</p>
<p><strong>Ambition to be a significant PBSA player; EBIT from PBSA will grow at a CAGR of 19.6%.</strong> FEO aims to grow its number of PBSA beds from 3,561 beds to 5,000 beds in 2025. This asset class has shown resilience against economic downturns and we believe that its PBSA business will be FEO’s main growth engine in the next few years, as we project its EBIT to grow at a CAGR of 19.6% from FY20-25F and in the medium term, contributing to 55% of its EBIT in FY25F.</p>
<p><strong>Nearing a comeback for its hospitality segment to boost earnings in FY21/22F.</strong> We believe that the gradual return of leisure travel in Singapore is imminent with Singapore’s high vaccination rate and its ongoing discussions. FEO aims to add an additional c.8,500 hotel rooms by 2025 and based on our estimates, it could translate to c.S$32m and c.S$7m of additional revenue and EBIT.</p>
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Non- SGX Report: These equity research reports are not written by the SGX.&nbsp;SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.




Singapore Company Focus
Far East Orchard Limited




Deep value within





Deep value and compelling reasons to trade higher&nbsp;
EBIT from PBSA will grow at a CAGR of 19.6%
Nearing a comeback for its hospitality segment
We initiate coverage with BUY and TP of S$1.70





Deep value and compelling reasons to trade higher. Far East Orchard (FEO) is currently trading at a TTM P/B multiple of 0.40x, which is at a discount to its hospitality peers (0.81x), PBSA peers (0.64x), and historical average (-0.54sd of its 4-year historical mean). With a pivot away from lumpy residential business into more recurring income focus from its hospitality and PBSA portfolio, we believe that earnings volatility will be greatly minimized. With greater earnings visibility, we expect the group to return to a “REIT-like” payout of 6 scts/share in FY22F, translating to a yield of c.5.5%.
Ambition to be a significant PBSA player; EBIT from PBSA will grow at a CAGR of 19.6%. FEO aims to grow its number of PBSA beds from 3,561 beds to 5,000 beds in 2025. This asset class has shown resilience against economic downturns and we believe that its PBSA business will be FEO’s main growth engine in the next few years, as we project its EBIT to grow at a CAGR of 19.6% from FY20-25F and in the medium term, contributing to 55% of its EBIT in FY25F.
Nearing a comeback for its hospitality segment to boost earnings in FY21/22F. We believe that the gradual return of leisure travel in Singapore is imminent with Singapore’s high vaccination rate and its ongoing discussions. FEO aims to add an additional c.8,500 hotel rooms by 2025 and based on our estimates, it could translate to c.S$32m and c.S$7m of additional revenue and EBIT.

















(Non-SGX Report) Far East Orchard Limited: Deep Value Within

<div><em><strong>Non- SGX Report: These equity research reports are not written by the SGX.</strong>&nbsp;SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.</em></div>
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<p>Company Update</p>
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<h2>Far East Orchard Limited</h2>
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<p><strong>COMPANY DESCRIPTION</strong><br>Far East Orchard Limited (FEO or the Company) is a property developer, hospitality owner and operator with a diversified property investment portfolio comprising purpose-built student accommodation (PBSA) and medical suites.</p>
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<p><strong>SUMMARY</strong><br>For the financial year ended 31 December 2020 (FY2020), the Group, comprising FEO and its subsidiaries, reported a 28.1% year-on-year (y-o-y) decline in revenue to S$112.2 million, mainly due to the severe impact of the COVID-19 pandemic on its hospitality business. However, higher revenue from the Group’s property business, largely owing to resilient performance by its UK PBSA business, had helped to offset the weaker hospitality business performance. During the period, the Group implemented cost containment measures which contributed to an 8.4% y-o-y decline in total expenses. Meanwhile, the Group recorded a share of loss from joint ventures of S$7.6 million on weaker performance from its hospitality joint ventures in Australia and Europe. This was partially offset by profit recognition of S$12.4 million from the Group’s joint venture Woods Square project in Singapore. Consequently, profit attributable to equity holders amounted to S$1.5 million as compared to S$26.0 million a year ago. Earnings per share (EPS) amounted to 0.35 cents for the period. Meanwhile, a final dividend of 3.0 cents per share for FY2020 would be paid on or around 5 July 2021.</p>
<p><strong>RECOMMENDATION</strong><br>Since our last company update issued on 25 September 2020, we note that FEO’s share price has fluctuated though it has broadly increased and reached S$1.180 recently. As of late, the share price has traded between S$1.110 and S$1.180. In terms of valuation, we note from our peer comparison analysis that FEO is currently trading at a P/B multiple of 0.43x, lower than the peer average P/B of 0.63x. We believe this could suggest FEO may be undervalued. Adopting a relative valuation approach, we estimate a target price of S$1.714 if FEO’s P/B were to adjust to the peer average of 0.63x. This current target price implies a 46.5% upside to the current share price of S$1.170. Meanwhile, we note that the outlook for the Group’s hospitality business remains challenged in the near term against a weak international travel backdrop. Nonetheless, the hospitality sectors in Singapore and Australia are gradually recovering, and we are positive on the outlook of these markets in the longer term. Further, strong demand for higher education in the UK is expected to support the PBSA market, and we believe the Group’s focus on expanding its PBSA business would underpin future earnings. Given the above, we will maintain a buy recommendation on FEO.</p>
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Non- SGX Report: These equity research reports are not written by the SGX.&nbsp;SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.






Company Update




Far East Orchard Limited














COMPANY DESCRIPTION Far East Orchard Limited (FEO or the Company) is a property developer, hospitality owner and operator with a diversified property investment portfolio comprising purpose-built student accommodation (PBSA) and medical suites.




SUMMARY For the financial year ended 31 December 2020 (FY2020), the Group, comprising FEO and its subsidiaries, reported a 28.1% year-on-year (y-o-y) decline in revenue to S$112.2 million, mainly due to the severe impact of the COVID-19 pandemic on its hospitality business. However, higher revenue from the Group’s property business, largely owing to resilient performance by its UK PBSA business, had helped to offset the weaker hospitality business performance. During the period, the Group implemented cost containment measures which contributed to an 8.4% y-o-y decline in total expenses. Meanwhile, the Group recorded a share of loss from joint ventures of S$7.6 million on weaker performance from its hospitality joint ventures in Australia and Europe. This was partially offset by profit recognition of S$12.4 million from the Group’s joint venture Woods Square project in Singapore. Consequently, profit attributable to equity holders amounted to S$1.5 million as compared to S$26.0 million a year ago. Earnings per share (EPS) amounted to 0.35 cents for the period. Meanwhile, a final dividend of 3.0 cents per share for FY2020 would be paid on or around 5 July 2021.
RECOMMENDATION Since our last company update issued on 25 September 2020, we note that FEO’s share price has fluctuated though it has broadly increased and reached S$1.180 recently. As of late, the share price has traded between S$1.110 and S$1.180. In terms of valuation, we note from our peer comparison analysis that FEO is currently trading at a P/B multiple of 0.43x, lower than the peer average P/B of 0.63x. We believe this could suggest FEO may be undervalued. Adopting a relative valuation approach, we estimate a target price of S$1.714 if FEO’s P/B were to adjust to the peer average of 0.63x. This current target price implies a 46.5% upside to the current share price of S$1.170. Meanwhile, we note that the outlook for the Group’s hospitality business remains challenged in the near term against a weak international travel backdrop. Nonetheless, the hospitality sectors in Singapore and Australia are gradually recovering, and we are positive on the outlook of these markets in the longer term. Further, strong demand for higher education in the UK is expected to support the PBSA market, and we believe the Group’s focus on expanding its PBSA business would underpin future earnings. Given the above, we will maintain a buy recommendation on FEO.










(Non-SGX Report) Company Update: Far East Orchard Limited

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<p class="gmail-p1">An ethos of stewardship and the pursuit of excellence have always been the cornerstones of life for hospitality real estate veteran Alan Tang.<br><br>
“I’m a firm believer in stewardship and servant leadership, two concepts which are anchored in my Christian faith,” said the Chief Executive Officer of SGX-listed real estate company Far East Orchard Ltd.<br><br>
“Being a steward means taking responsibility for the resources that are entrusted to me – be it capital, human or natural resources. In particular, I’m entrusted to manage the capital of the company wisely, to enhance returns, and build a sustainable business.”<br><br>
The human factor is equally important. “Servant leadership values the people put under my care, with a responsibility to develop them to their fullest potential,” he added. <br><br>
“I believe in building a company with sustainable profits and highly motivated staff for the purpose of giving back, which then allows the business to fulfil its corporate social responsibility meaningfully.”<br><br>
A Bachelor of Science with Distinction graduate from Cornell University’s School of Hotel Administration and a Chartered Financial Analyst, Tang has broad experience in the global hospitality real estate capital market and operations. He was appointed Group CEO of Far East Orchard in January 2020. <br><br>
His previous roles included Senior Vice President, Head Hospitality of GIC Real Estate Pte Ltd, where he was responsible for investment and asset management of a multi-billion-dollar portfolio, and Chief Operating Officer of Frasers Hospitality International Pte Ltd, where he led the global operations of its hotels and serviced apartments.<br><br>
“In terms of achievements, the most memorable was my role in starting the hospitality portfolio in GIC Real Estate,” Tang recalled. <br><br>
“I also look back with much gratitude on my involvement in acquiring some of the finest hotel properties around the world, such as Browns Hotel in London, Hotel Vier Jahreszeiten in Hamburg, Westin Sydney, Westin Tokyo, and the InterContinental Hotel Paris, which was rebranded Westin Paris.”<br><br>
This relentless pursuit of quality is also a key element of the corporate culture that Tang is building in Far East Orchard. “As a real estate developer and operator, it falls on us to embody this spirit of excellence in the various types of lodging that we provide for our customers,” he pointed out.<br><br>
“Whether they are students, holidaymakers or business travellers, we must provide excellence in all aspects of our services, to ensure that our guests feel welcome and taken care of while under our roof.”<br><br><strong>Transformation Journey</strong><br><br>
Listed on SGX Mainboard since 1968, Far East Orchard is a real estate company with a lodging platform that aims to achieve sustainable and recurring income through a diversified and balanced portfolio. <br><br>
A member of Far East Organization, Singapore’s largest private property developer, Far East Orchard redefined itself through a strategic transformation in 2012 by expanding into the businesses of hospitality management and healthcare real estate. In 2015, it further diversified its real estate portfolio to include purpose-built student accommodation (PBSA) properties in the UK. <br><br>
Through its Far East Hospitality arm, the Group owns more than 10 hospitality assets, and manages over 100 properties with more than 16,500 rooms in Denmark, Germany, Hungary, Japan, Australia, New Zealand, Malaysia and Singapore.<br><br>
Its PBSA portfolio in the UK comprises 3,561 beds in the cities of Brighton, Bristol, Leeds, Liverpool, Newcastle upon Tyne and Sheffield. It also holds a portfolio of purpose-built medical suites for lease and sale in Singapore's premier medical hub in Novena.<br><br>
The Group is well on its transformation journey to build recurring income streams, Tang noted. “Since coming on board, I’ve been crystallising this process into the FEOR 25 strategy, one that anchors on the strength of our PBSA and hospitality businesses,” he said.<br><br>
“Using these two levers, Far East Orchard is building a lodging platform that delivers sustainable returns over the long term, and positions the Group for further expansion beyond 2025.”<br><br>
For the Group’s hospitality operations, it recently crossed a significant milestone with the opening of its 100th hotel – Adina Melbourne Southbank – managed by Toga Far East (TFE) Hotels.<br><br>
Over the course of 2020, and despite the impact of COVID-19, the Group opened a total of approximately 1,300 rooms, half of which took place in the last quarter of the year.<br><br>
“Through Far East Hospitality, we intend to continue growing our recurring income base with hotel management agreements in key cities across the Asia Pacific region – cities such as Australia and Japan that have strong long-term tourism fundamentals, thanks to domestic travel and other demand drivers,” Tang added.<br><br><strong>Resilient Asset Class</strong><br><br>
For its PBSA segment, the Group is looking to deepen its presence in the UK, to build a portfolio with meaningful size and scale. Even amidst the pandemic and Brexit uncertainties, the UK PBSA market has proved to be resilient, Tang pointed out.<br><br>
“University enrolments have grown by 4% for academic year 2020/21 compared to the prior year, driven both by the increase in domestic UK student enrolments as well as that of international students from outside the EU region,” he noted.<br><br>
The Group believes that demand for higher education in the UK will remain steady, as will the desire for a quality on-campus education experience. <br><br>
“Although some aspects of higher learning may move into the online space, we’ve also seen high levels of dissatisfaction with online learning among students – these students are paying significant tuition fees for an educational experience, of which in-person interaction plays an important role,” Tang said.<br><br>
And the Group’s recent acquisition of a third, 301-bed PBSA property in Bristol – which brings its student accommodation portfolio to 3,561 beds across 12 assets in the UK – underscores its commitment to the asset class.<br><br>
“Our focus remains on cities with high-tariff universities, strong student population growth and favourable supply/demand dynamics,” he added.<br><br>
Far East Orchard intends to continue building up its lodging platform in the coming years. It has set a target of achieving 25,000 hotel rooms and 5,000 PBSA beds by 2025, and will achieve this through a combination of operating contracts, strategic partnerships and acquisitions.<br><br>
“Given the challenging global economic and business environment, coupled with a likely extended period of low interest rates, we believe our healthy balance sheet positions us to seize attractive asset acquisition opportunities that fit our strategy,” Tang noted.<br><br>
“We will adopt a disciplined approach in the evaluation of all opportunities in the hospitality and PBSA businesses – our goal is to ensure that the yields from acquired assets meet our objectives for the building of recurring income.”<br><br>
Despite the reasonably bright growth outlook, the year so far has been challenging, not only for Far East Orchard, but all business leaders. <br><br>
“The hospitality industry is facing a crisis unlike any it has ever seen before. We are likely to see a protracted recovery for the industry as the overhang from COVID-19 may continue for quite some time,” Tang said.<br><br>
“But just like in any other crisis, I believe that pockets of opportunity do, and will continue to, exist.”<br><br>
In the meantime, Tang remains focused on prudent capital management, and staying nimble to navigate the recovery of the Group’s various businesses through the coronavirus pandemic.<br><br>
“The doom and gloom will not last forever, and my focus is on resourcing the group appropriately to fulfil our strategic intent of building a lodging platform that is ready to take advantage of post-COVID-19 growth.”<br><br>
When the 55-year-old father is not managing the operations of Far East Orchard, he can be found with his two daughters and son, aged 15 to 24 years.<br><br>
“I want my kids to be good stewards, to aim for the spirit of excellence in all things, and do their best in whatever they are entrusted,” he said. “But at the same time, I tell them that it’s essential to hold everything lightly, so that we can enjoy more peace, and be able to sleep soundly at night.”<br><br><strong>Far East Orchard Ltd</strong></p>

<p>Far East Orchard is a real estate company with a lodging platform that aims to achieve sustainable and recurring income through a diversified and balanced portfolio. Listed on SGX Mainboard since 1968, the Group is a member of Far East Organization, Singapore’s largest private property developer. Established since 1967, Far East Orchard has developed residential, commercial, hospitality and PBSA properties in Australia, Malaysia, Singapore and the UK. Its PBSA portfolio in the UK comprises 3,561 beds in the cities of Brighton, Bristol, Leeds, Liverpool, Newcastle upon Tyne and Sheffield. The Group also holds a portfolio of purpose‐built medical suites for lease and for sale in Singapore's premier medical hub in Novena.<br><br>
Through its hospitality arm Far East Hospitality, Far East Orchard owns more than 10 hospitality assets and manages over 98 properties with more than 16,000 rooms in Australia, Denmark, Germany, Hungary, Malaysia, New Zealand and Singapore. Far East Hospitality made its first joint foray into Japan with Far East Organization in 2018.<br>
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<p>The company website is: <a href="http://www.fareastorchard.com.sg"><strong>www.fareastorchard.com.sg</strong></a><br>
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<p>Click <a href="https://www.sgx.com/securities/equities/O10"><strong>here</strong></a> for the company's StockFacts page.<br><br>
For the nine-month period ended 30 September 2020 business update, click <a href="https://links.sgx.com/1.0.0/corporate-announcements/E1E593KEDYXSB41L/638363_FarEastOrchard-Business_Performance_Update.pdf"><strong>here</strong></a>.</p>

<p><br><strong>About kopi-C: the Company brew</strong></p>

<p><strong>Text: Jennifer Tan-Stanisic</strong><br><strong>Photo: Company file</strong><br><br><em>kopi-C </em>is a regular column on the SGX Research website that features C-level executives of leading companies listed on Singapore Exchange. These interviews are profiles of senior management aimed at helping investors better understand the individuals who run these corporations.<br><br>
For previous editions of <em>kopi-C: the Company brew,</em> please click <a href="https://www.sgx.com/research-education/market-dialogues"><strong>here</strong></a>.  <br><br>
For more information, or if you would like your senior executives to be featured on SGX Market Dialogues, please send suggestions to <a href="jennifer.t@sgx.com"><strong>jennifer.t@sgx.com</strong></a>.</p>

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    FEO-CEO


An ethos of stewardship and the pursuit of excellence have always been the cornerstones of life for hospitality real estate veteran Alan Tang.  
“I’m a firm believer in stewardship and servant leadership, two concepts which are anchored in my Christian faith,” said the Chief Executive Officer of SGX-listed real estate company Far East Orchard Ltd.  
“Being a steward means taking responsibility for the resources that are entrusted to me – be it capital, human or natural resources. In particular, I’m entrusted to manage the capital of the company wisely, to enhance returns, and build a sustainable business.”  
The human factor is equally important. “Servant leadership values the people put under my care, with a responsibility to develop them to their fullest potential,” he added.   
“I believe in building a company with sustainable profits and highly motivated staff for the purpose of giving back, which then allows the business to fulfil its corporate social responsibility meaningfully.”  
A Bachelor of Science with Distinction graduate from Cornell University’s School of Hotel Administration and a Chartered Financial Analyst, Tang has broad experience in the global hospitality real estate capital market and operations. He was appointed Group CEO of Far East Orchard in January 2020.   
His previous roles included Senior Vice President, Head Hospitality of GIC Real Estate Pte Ltd, where he was responsible for investment and asset management of a multi-billion-dollar portfolio, and Chief Operating Officer of Frasers Hospitality International Pte Ltd, where he led the global operations of its hotels and serviced apartments.  
“In terms of achievements, the most memorable was my role in starting the hospitality portfolio in GIC Real Estate,” Tang recalled.   
“I also look back with much gratitude on my involvement in acquiring some of the finest hotel properties around the world, such as Browns Hotel in London, Hotel Vier Jahreszeiten in Hamburg, Westin Sydney, Westin Tokyo, and the InterContinental Hotel Paris, which was rebranded Westin Paris.”  
This relentless pursuit of quality is also a key element of the corporate culture that Tang is building in Far East Orchard. “As a real estate developer and operator, it falls on us to embody this spirit of excellence in the various types of lodging that we provide for our customers,” he pointed out.  
“Whether they are students, holidaymakers or business travellers, we must provide excellence in all aspects of our services, to ensure that our guests feel welcome and taken care of while under our roof.”  Transformation Journey  
Listed on SGX Mainboard since 1968, Far East Orchard is a real estate company with a lodging platform that aims to achieve sustainable and recurring income through a diversified and balanced portfolio.   
A member of Far East Organization, Singapore’s largest private property developer, Far East Orchard redefined itself through a strategic transformation in 2012 by expanding into the businesses of hospitality management and healthcare real estate. In 2015, it further diversified its real estate portfolio to include purpose-built student accommodation (PBSA) properties in the UK.   
Through its Far East Hospitality arm, the Group owns more than 10 hospitality assets, and manages over 100 properties with more than 16,500 rooms in Denmark, Germany, Hungary, Japan, Australia, New Zealand, Malaysia and Singapore.  
Its PBSA portfolio in the UK comprises 3,561 beds in the cities of Brighton, Bristol, Leeds, Liverpool, Newcastle upon Tyne and Sheffield. It also holds a portfolio of purpose-built medical suites for lease and sale in Singapore's premier medical hub in Novena.  
The Group is well on its transformation journey to build recurring income streams, Tang noted. “Since coming on board, I’ve been crystallising this process into the FEOR 25 strategy, one that anchors on the strength of our PBSA and hospitality businesses,” he said.  
“Using these two levers, Far East Orchard is building a lodging platform that delivers sustainable returns over the long term, and positions the Group for further expansion beyond 2025.”  
For the Group’s hospitality operations, it recently crossed a significant milestone with the opening of its 100th hotel – Adina Melbourne Southbank – managed by Toga Far East (TFE) Hotels.  
Over the course of 2020, and despite the impact of COVID-19, the Group opened a total of approximately 1,300 rooms, half of which took place in the last quarter of the year.  
“Through Far East Hospitality, we intend to continue growing our recurring income base with hotel management agreements in key cities across the Asia Pacific region – cities such as Australia and Japan that have strong long-term tourism fundamentals, thanks to domestic travel and other demand drivers,” Tang added.  Resilient Asset Class  
For its PBSA segment, the Group is looking to deepen its presence in the UK, to build a portfolio with meaningful size and scale. Even amidst the pandemic and Brexit uncertainties, the UK PBSA market has proved to be resilient, Tang pointed out.  
“University enrolments have grown by 4% for academic year 2020/21 compared to the prior year, driven both by the increase in domestic UK student enrolments as well as that of international students from outside the EU region,” he noted.  
The Group believes that demand for higher education in the UK will remain steady, as will the desire for a quality on-campus education experience.   
“Although some aspects of higher learning may move into the online space, we’ve also seen high levels of dissatisfaction with online learning among students – these students are paying significant tuition fees for an educational experience, of which in-person interaction plays an important role,” Tang said.  
And the Group’s recent acquisition of a third, 301-bed PBSA property in Bristol – which brings its student accommodation portfolio to 3,561 beds across 12 assets in the UK – underscores its commitment to the asset class.  
“Our focus remains on cities with high-tariff universities, strong student population growth and favourable supply/demand dynamics,” he added.  
Far East Orchard intends to continue building up its lodging platform in the coming years. It has set a target of achieving 25,000 hotel rooms and 5,000 PBSA beds by 2025, and will achieve this through a combination of operating contracts, strategic partnerships and acquisitions.  
“Given the challenging global economic and business environment, coupled with a likely extended period of low interest rates, we believe our healthy balance sheet positions us to seize attractive asset acquisition opportunities that fit our strategy,” Tang noted.  
“We will adopt a disciplined approach in the evaluation of all opportunities in the hospitality and PBSA businesses – our goal is to ensure that the yields from acquired assets meet our objectives for the building of recurring income.”  
Despite the reasonably bright growth outlook, the year so far has been challenging, not only for Far East Orchard, but all business leaders.   
“The hospitality industry is facing a crisis unlike any it has ever seen before. We are likely to see a protracted recovery for the industry as the overhang from COVID-19 may continue for quite some time,” Tang said.  
“But just like in any other crisis, I believe that pockets of opportunity do, and will continue to, exist.”  
In the meantime, Tang remains focused on prudent capital management, and staying nimble to navigate the recovery of the Group’s various businesses through the coronavirus pandemic.  
“The doom and gloom will not last forever, and my focus is on resourcing the group appropriately to fulfil our strategic intent of building a lodging platform that is ready to take advantage of post-COVID-19 growth.”  
When the 55-year-old father is not managing the operations of Far East Orchard, he can be found with his two daughters and son, aged 15 to 24 years.  
“I want my kids to be good stewards, to aim for the spirit of excellence in all things, and do their best in whatever they are entrusted,” he said. “But at the same time, I tell them that it’s essential to hold everything lightly, so that we can enjoy more peace, and be able to sleep soundly at night.”  Far East Orchard Ltd

Far East Orchard is a real estate company with a lodging platform that aims to achieve sustainable and recurring income through a diversified and balanced portfolio. Listed on SGX Mainboard since 1968, the Group is a member of Far East Organization, Singapore’s largest private property developer. Established since 1967, Far East Orchard has developed residential, commercial, hospitality and PBSA properties in Australia, Malaysia, Singapore and the UK. Its PBSA portfolio in the UK comprises 3,561 beds in the cities of Brighton, Bristol, Leeds, Liverpool, Newcastle upon Tyne and Sheffield. The Group also holds a portfolio of purpose‐built medical suites for lease and for sale in Singapore's premier medical hub in Novena.  
Through its hospitality arm Far East Hospitality, Far East Orchard owns more than 10 hospitality assets and manages over 98 properties with more than 16,000 rooms in Australia, Denmark, Germany, Hungary, Malaysia, New Zealand and Singapore. Far East Hospitality made its first joint foray into Japan with Far East Organization in 2018. 
 

The company website is: www.fareastorchard.com.sg 
 

Click here for the company's StockFacts page.  
For the nine-month period ended 30 September 2020 business update, click here.

 About kopi-C: the Company brew

Text: Jennifer Tan-Stanisic Photo: Company file  kopi-C is a regular column on the SGX Research website that features C-level executives of leading companies listed on Singapore Exchange. These interviews are profiles of senior management aimed at helping investors better understand the individuals who run these corporations.  
For previous editions of kopi-C: the Company brew, please click here.    
For more information, or if you would like your senior executives to be featured on SGX Market Dialogues, please send suggestions to jennifer.t@sgx.com.

 



Far East Orchard Eyes Lodging Platform for Growth

<h2>10 Questions for Far East Orchard Limited</h2>
<p><strong>Company Overview</strong><br>Far East Orchard Limited is a property developer, hospitality assets owner and operator, with a diversified property investment portfolio comprising purpose-built student accommodation (PBSA) and medical suites. It has properties in Australia, Malaysia, Singapore and the United Kingdom. It is a member of Far East Organization, Singapore’s largest private property developer. <a href="https://www.sgx.com/securities/equities/O10" target="_blank" rel="noopener">Link to StockFacts company page</a></p>
<ol>
<li><strong>The Group’s diversified property portfolio comprises residential, commercial, hospitality, purpose-built student accommodation (PBSA) and medical suites. What would you maintain or change?</strong></li>
</ol>
<ul>
<li>Our strategy for the near to mid-term is to focus on building a lodging platform on the back of our hospitality and PBSA businesses. In 2012, we embarked on a strategic transformation and expanded into hospitality management and healthcare real estate, to generate a sustainable and recurring income stream to augment our property development and investment businesses. In 2015, we further diversified into PBSA properties in the UK. These real estate lodging businesses will be our main priority in the coming years.</li>
<li>Our enlarged base of recurring income from hospitality and the PBSA businesses complement the one-off earnings from property development projects to provide better stability. We aim to continue growing recurring hospitality revenue through operating contracts and strategic partnerships and continue the expansion of the PBSA portfolio through acquisitions or development.</li>
</ul>
<p><strong>2. Describe the Group’s revenue mix and profitability over the past few years.</strong></p>
<ul>
<li>We adopt a diversified strategy to provide earnings stability, and have seen an increased proportion of operating profit from our hospitality and property investment businesses, from 85% in FY2018 to almost 100% in FY2019. Our hospitality segment has been the core contributor to our recurring income base.</li>
<li>Since entering the PBSA sector in 2015, our portfolio has increased by fivefold to over 3,000 beds. This has provided a healthy balance and diversification to the recurring income composition provided by the hospitality business. We see potential to continue the expansion of our PBSA portfolio given the continued growth of both domestic and international student numbers in the United Kingdom (UK), and the resilient nature of this income stream.</li>
</ul>

10 Questions for Far East Orchard Limited
Company Overview Far East Orchard Limited is a property developer, hospitality assets owner and operator, with a diversified property investment portfolio comprising purpose-built student accommodation (PBSA) and medical suites. It has properties in Australia, Malaysia, Singapore and the United Kingdom. It is a member of Far East Organization, Singapore’s largest private property developer. Link to StockFacts company page

The Group’s diversified property portfolio comprises residential, commercial, hospitality, purpose-built student accommodation (PBSA) and medical suites. What would you maintain or change?


Our strategy for the near to mid-term is to focus on building a lodging platform on the back of our hospitality and PBSA businesses. In 2012, we embarked on a strategic transformation and expanded into hospitality management and healthcare real estate, to generate a sustainable and recurring income stream to augment our property development and investment businesses. In 2015, we further diversified into PBSA properties in the UK. These real estate lodging businesses will be our main priority in the coming years.
Our enlarged base of recurring income from hospitality and the PBSA businesses complement the one-off earnings from property development projects to provide better stability. We aim to continue growing recurring hospitality revenue through operating contracts and strategic partnerships and continue the expansion of the PBSA portfolio through acquisitions or development.

2. Describe the Group’s revenue mix and profitability over the past few years.

We adopt a diversified strategy to provide earnings stability, and have seen an increased proportion of operating profit from our hospitality and property investment businesses, from 85% in FY2018 to almost 100% in FY2019. Our hospitality segment has been the core contributor to our recurring income base.
Since entering the PBSA sector in 2015, our portfolio has increased by fivefold to over 3,000 beds. This has provided a healthy balance and diversification to the recurring income composition provided by the hospitality business. We see potential to continue the expansion of our PBSA portfolio given the continued growth of both domestic and international student numbers in the United Kingdom (UK), and the resilient nature of this income stream.


10 in 10 with Far East Orchard - Building A Lodging Platform (27Oct2020)

Singapore

Far East Orchard Limited operates a diversified portfolio focusing on property development, hospitality real estate development and management and healthcare real estate. The Company operates a hospitality portfolio spanning Australia, China, Denmark, Germany, Hungary, Malaysia, New Zealand, and Singapore and owns purpose-built medical suites in Singapore.

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Far East Orchard Eyes Lodging Platform for Growth

An ethos of stewardship and the pursuit of excellence have always been the cornerstones of life for hospitality real estate...

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10 in 10 with Far East Orchard - Building A Lodging Platform (27Oct2020)

10 Questions for Far East Orchard Limited Company OverviewFar East Orchard Limited is a property developer, hospitality assets owner and operator,...

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