CIMB Report - 14 Jan 2008

What’s on the table

Banyan Tree Holdings (S$1.71) – Sanctuary of returns We initiate coverage with Outperform and sum-of-the-parts valuation of S$2.75, implying 61% upside. BTH is a leading niche resort operator in Asia-Pacific with two award-winning brands that offer investors exposure to the high-end traveller market.

Key investment highlights include:

1) Tripling of room keys and doubling spa treatment rooms by 2010. 65% of new room keys located in Middle-East and China which are among the fastest growing affluent populations in the world;
2) 2006-2009 core earnings CAGR of 21% will be driven by ROE-enhancing management contracts. BTH is poised to deliver superior recurring ROE to other Asian hotel operators, triggering a re-rating of BTH's current EV/EBITDA valuations to premiums of 5-39% to its peers, up from the current discount of 21-25%;
3) Key catalysts include earnings delivery and active news flow on deal pipeline expansion.

Quick Takes

· OECD Leading Index - Nov 07: Downswing in all major OECD economies

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