Banyan Tree

Banyan Tree: 1Q11 results generally in line.
Revenue at $114.3m, +8% yoy, boosted by divestment of a devt site in Lijiang to its China Fund for $24.7m. Stripping this out, revenue at $89.6m was 16% lower YoY, due to cessation of hotel revenue from Dusit Thani Hotel after its sale in Oct 2010 and the sale of only 1 unit each of Laguna Village Bungalow and BT Phuket Double Pool Villa, compared to several units in 1Q10...

Profit after tax is up 36% YoY to $10m from the divestment and lower depreciation after the sale of the hotel.
Average occupancy rates -6% to 57% due to newly opened resorts still ramping up. Average room rates are down 10% due to the same reason as well as from keen competition. Mgmt also states weakened USD as a factor. RevPAR is also down 3% YoY to S$245/ night...

Mgt has earmarked $200m in cash to build “Branded residences” for first time homeowners. These are likely to be township developments in 2nd and 3rd tier Chinese cities. DBSV believes this to be an extension of current skill set and experience on a larger scale and not an entirely different business...

Mgmt expects the next 2 quarters to be challenging due to uncertainties in key markets, as well as the seasonally low period for holidays. $18m sale of Laguna Beach Resort to be recognized in 2Q11 and the reopening of its flagship Angsana Phuket in 4Q11 after a US$31m renovation.
DBSV maintains Hold with TPS$1.09. Stock currently trades at 33.8X P/E.