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Hotel Royal
Bloomberg: HRY SP Reuters: HTRS.SI Price: SGD2.31
Pr i ce 30 Day Movi ng Aver age

Date: February 27, 2012
Price (SGD)
2.80 2.60 2.40 2.20 2.00 1.80 1.60 1.40

GICS: Consumer Discretionary/Hotels, Resorts & Cruise
Lines

a hotelier with a chain of three 4-star hotels in Singapore and Penang, and a portfolio of investment properties in New Zealand, Singapore and Penang.

Business Summary: Incorporated in 1968, Hotel Royal is

Country of Incorporation: Singapore Head Office Location: Hotel Royal, 36 Newton Road, Singapore 307964 Zealand
Vol ume

Vol ('000)
4,000 3,000 2,000 1,000 0

Place of Operations: Singapore, Malaysia and New Website: www.hotelroyal.com

+65-64260101

IR Contact: Lee Chou Hock | chlee@hotelroyal.com.sg | Analyst: Sharon Wong, CFA / Ching Wah, Tam

Feb 09 May 09 Jul 09 Sep 09 Nov 09 Jan 10 Apr 10 Jun 10 Aug 10 Oct 10 Dec 10 Mar 11 May 11 Jul 11 Sep 11 Nov 11 Feb 12

Results Review
 4Q11 results below expectations. Hotel Royal posted a net loss of SGD1.1 mln in 4Q11 vs. a net profit of SGD4.1 mln in 4Q10, due mainly to a number of one-off items: (i) expenses relating to the acquisition of White Orchid Hotel (SGD0.3 mln); (ii) withholding tax on interest receivable from Grand Complex (SGD1.1 mln); and (iii) impairment loss on an investment property (MYR2.46 mln). The withholding tax was recognized on interest receivable from subsidiary in New Zealand. Nevertheless, after adjusting for the one-off items, Hotel Royal posted a 6.1% YoY rise in recurring net profit to SGD9.89 mln in 2011 vs. SGD9.32 mln in 2010. Strong growth in hotel operations. F&B revenue and rental income rose 27.2% YoY and 22.1% YoY in 2011, respectively on the back of higher room rates, hotel occupancy, additional contribution from Hotel Royal in Kuala Lumpur, which was acquired in October 2010, and better performance from Hotel Royal in Penang. The jump in rental income was due mainly to commencement of a new major tenancy in Grand Complex in New Zealand in September 2010. Upgrading hotel in Bangkok. Due to a scheduled upgrading programme for about six to eight months this year for the newly acquired 315-room White Orchard Hotel in Bangkok, it is unlikely to make much contributions in 2012.

Earnings Outlook / Estimates Revision
 Revisions in 2012 earnings. Based on the 4Q11 results, we revise our 2012 forecast downward and introduce our 2013 forecast. Hotel Royal expected slower growth this year, due mainly to the impact of the economic uncertainties in Europe. As such, we forecast Hotel Royal to record a single digit growth in both hotel room revenue and food & beverage as compared with its strong performance in the last two years. Similarly, its property investments in New Zealand will continue to see slow growth in line with the economy.

Investment Risks
 Global economy and epidemic. Hotel Royal’s operations are vulnerable to both global and local economic conditions as consumer spending and business activities would have direct impact on its hotel/office/retail mall occupancy, room rates and rental rates. In addition, a global epidemic, such as SARS, will have a detrimental impact on tourist arrivals. Forex risks. Given that its operations are spread over three countries, Hotel Royal naturally faces a certain degree of currency risk i.e. exposure to fluctuations in MYR, NZD, USD, AUD, GBP, CHF and HKD.







Key Stock Statistics 52-week Share Price Range (SGD) Avg Vol - 12 months ('000 shares) Price Performance (%) - 1 month - 3 month - 12 month No. of Outstanding Shares (mln) Free Float (%) Market Cap (SGD mln) Enterprise Value (SGD mln) Major Shareholders (%) Aik Siew Tong Ltd The Great Eastern Holdings Limited Hock Tart Pte Ltd 24.2 12.0 10.3 1.97 - 2.47 4.1 7.4 5.0 -1.7 84.0 25.2 194.0 179.3

Per Share Data FY Dec. Book Value (SG cents) Cash Flow (SG cents) Reported Earnings (SG cents) Dividend (SG cents) Payout Ratio (%) PER (x) P/Cash Flow (x) P/Book Value (x)...
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