Mandarin Oriental

Mandarin Oriental: Grp reported rev for 9M10, with RevPAR +20% in HK and +23% in SG, with two markets accounting for 48% of its rev. That said, compared to Shangri-La, Mandarin has much higher exposure to US & Europe (42% of 2011E rev vs 0% for Shangri-La). Detusche however prefers Shangri-La for better long term growth prospects….

Note that grp trading at historical average valuation of 12x EV/EBITDA. On the back of better demand outlook for luxury hotels, Deutsche raises 2010-12 EPS by 4-13%. For 2011, incorporate US$10m branding fees from the sale of Mandarin Oriental Residences in London….

Raises 2011 EPS is by 27%. New estimates largely in line with consensus. Note that upside risks include better RevPAR growth. Downside risk is delays in the hotel openings