Global Premium Hotels

Global Premium Hotels: 1Q13 results was broadly in-line, although at the lower end of estimates. Rev at $14.5m, -2.1% yoy and -4.6% yoy while net profit at $4.3m, -32% yoy and flat qoq. Weaker results was on back of lower Hotel room rev at $14.3m, -1.1% yoy, due to the lower average occupancy rate (AOR) of 89.6% vs 91.7% yoy. Revenue per available room (RevPAR) remained relative stable at $91.4 in 1Q13 and 1Q12. Rental income for 1Q13 at $251k, -38.6% yoy due to the completion of disposals of Changi Road Property and Pasir Panjang Commercial Property in 2Q12. The grp saw a rise in admin expenses and finance costs which weighed on bottom-line. Admin expenses rose 13.6% to $5.6m due to the increase in staff costs in relation to the general increase in wages and higher depreciation expenses, while finance costs rose 211.2% to $1.95m mainly due to restructuring exercise undertaken by the Company pursuant to the IPO in 2Q 2012. Going forward the grp note that the uncertain global economic conditions and expected addition of 3,308 new hotel rooms in Singapore in 2013 are likely to contribute to a more competitive operating landscape for the SG hospitality market. Nevertheless, with increasing popularity of the budget airlines in the region, believes that the performance of its economy-tier and mid-tier hotels will continue to be resilient. The Group’s new hotel development at 165 & 167 Tyrwhitt Road currently under construction is targeted to open for business in 1H 2014. Upon completion, the new hotel will boost the Group’s hotel portfolio by another 270 rooms. At current price, valuations are compelling, with the grp trading at just 0.68x P/B. Ratings as follows: OCBC maintains Buy with $0.33 TP