Global Premium Hotel
NOT RATED S$0.25
Price Target : 12-Month S$0.33
King of Budget Hotels
• Leading provider of budgethotels in Singapore
• Strong branding among travelers with its “Fragrance” and “Parc Sovereign” hotels.
• FV of S$0.29
Household name in the budget hotel space. Global Premium Hotels (GPHL) operates one of Singapore’s largest economy /mid-tier hotel chains under the “Fragrance” brand and one hotel under the “Parc Sovereign” brand with a total room count of 1,738.
Resilient operating model. GPHL’s portfolio is poised to expand by a further c15% to 2,003 rooms through the development of the group’s largest hotel at Tyrwhitt Road site. This will be its 2nd Parc Sovereign Hotel, and is expected to be completed by the end of 2014. GPHL’s exposure in the economy segment of Singapore’s hospitality sector has proven to be resilient even in recessions. Going forward, its expanded portfolio will allow the group to capture a larger share of budget travellers to Singapore in the medium term, post further liberalisation of air travel on the back of ASEAN open skies pact come 2020.
Fair value of S$0.33. Given GPHL’s leading position in the economy tier segment of the Singapore hotel sector, we derive a fair value of S$0.33, based on a 30% discount to its RNAV of S$0.47.
Earnings upgrade will be a price catalyst. Better than expected performance from the economy hotel segment in the coming quarters or acquisitions not factored in our forecasts are likely to drive profitability and stock price.
Publish date: 03/10/13