SINGAPORE (Feb 15): OCBC is maintaining its “hold” on Global Premium Hotels with higher target price of 34 cents.
This comes as the research house expects negative RevPAR growth in FY17, lowering its FY17 revenue forecast to $55.4 million from $59.8 million while forecast PATMI is lowered to $10.2 million from $14.1 million.
In a Thursday report, lead analyst Deborah Ong says FY17 looks to be another tough year for FY17. Ong expects downward pressure on 2017 RevPAR from the expected 6% growth in hotel room supply while the growth in arrivals from China tourists towards the end of 2016 seems to be faltering.
To recap, Global Premium Hotels’ FY16 revenue came in within expectations. Revenue dropped 4.6% to $58.3 million, or 100.4% of its full-year forecast, mainly due to lower hotel room revenue recognised from most of its hotels, including certain hotels which had to close for asset enhancement initiatives (AEI).
The decrease was partially offset by additional contribution from certain hotels which were completed with AEI in 2015. Similar to what was observed for other hotel assets, FY16 AOR (average occupancy rate) decreased 4.0 ppt to 77.6%, contributing to a RevPAR drop of 4.5% to $81.5. Rental income was relatively stable at $1.1 million. Consequently, PATMI dropped 19.3% to $11.9 million while NAV remained flat at around $729.1 million.
“We encourage investors to accumulate shares at 29 cents and lower and maintain “hold” on Global Premium Hotels in the meantime,” says Ong.
See also: RHB initiates coverage on CSE Global with ‘buy’ call with TP of 58 cents.
Shares of Global Premium Hotels are trading at 30 cents.
