Monday, November 4, 2013

Global Premium Hotels: Solid performance in 3Q13 as expected (OCBC)

Global Premium Hotels:
Fair value S$0.33
add: 12m dividend forecast S$0.002
versus: Current price S$0.25

Solid performance in 3Q13 as expected
• Profit up 19% YoY
• RevPAR stable YoY
• Maintain BUY

The 3Q13 results for Global Premium Hotels (GPH) were in-line with our expectations. Total revenue climbed 5.7% YoY to S$15.7m and gross profit rose 5.7% to S$13.6m.
Finance costs declined 13.6% to S$2.0m due to partial repayment of term loans and lower average interest rate. 3Q13 net profit climbed 18.7% to S$4.9m. 9M13 revenue and EPS came to 75% and 77% of our prior respective full-year estimates. RevPAR was flat YoY at S$97.1. Average occupancy rate was up 1 ppt YoY to 91.6%. Using a 15% discount to RNAV, we maintain our fair value of S$0.33 and BUY rating on GPH.

3Q13 results as expected
The 3Q13 results for Global Premium Hotels (GPH) were generally in-line with our expectations. Total revenue climbed 5.7% YoY to S$15.7m and gross profit rose 5.7% to S$13.6m. Other operating income fell by 27.3% YoY to S$160k due to lower income earned from a smaller fixed deposit balance placed with financial institutions and partially offset by higher income from the hotels' auxiliary services. Finance costs declined 13.6% to S$2.0m due to partial repayment of term loans and lower average interest rate. 3Q13 net profit climbed 18.7% to S$4.9m. 9M13 revenue and EPS came to 75% and 77% of our prior respective full-year estimates.

RevPAR stable despite challenging industry
3Q13 hotel room revenue increased 6.1% YoY to S$15.5m. This was mainly due to the contribution of S$0.7m by Fragrance Hotel-Ruby post asset enhancement works. The remaining hotels contributed S$0.2m of the increase in hotel room revenue. There was a closure of a commercial unit at Fragrance Hotel-Bugis which was converted into four hotel rooms with effect from 1 Aug. RevPAR was flat YoY at S$97.1. Average occupancy rate was up 1 ppt YoY to 91.6%. GPH's operational performance figures were stronger than its peer group's. RevPAR for Singapore hotels in the Economy category saw RevPAR in Jul and Aug fall by 10.7% and 8.1%% YoY respectively, according to the STB. We believe GPH's continued outperformance is a testament to its strong market position in the Economy hotel space.

Confident of longer term prospects
Management expects the industry landscape to become more challenging with the growth in hotel room supply over 2013-2015. However, it is confident of longer term prospects for the industry, especially with the tourist offerings and the soon-to-be completed Sports Hub.

Maintain BUY
Using a 15% discount to RNAV, we maintain our fair value of S$0.33 and BUY rating on GPH.



Source/Extract/Excerpts/来源/转贴/摘录: OCBC-Research,
Publish date: 31/10/13

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