Guocoleisure

Guocoleisure: 1HFY2014 net profit slumped 14.9% y/y to US$30.2m while revenue inched up 5.2% to US$214.5m mainly on improved RevPAR and land disposal, but offset by the volatility from gaming revenue. Bass Strait oil and gas royalties decreased 12.5% y/y on lower average crude oil prices and lower oil and gas production. Bottomline was further weighed by various operating expenses, in particular personnel expenses which, personnel expenses which increased 18.1% to US$62.1m mainly due to the recruitment for ongoing rebranding exercise in UK. Come February 2014, 5 London hotels will be undergoing refurbishment. That plus the ongoing rebranding exercise will impact near term performance. That said, a recovering GDP might bode well for the company in the medium term. NAV as at end Dec was US90₵, which translates to a ~0.74x P/B, compared to its 5 year historical average of 0.97x