Hotel Prop

Hotel Prop: disappoints, 2Q14 earnings shrank 81.0% y/y to $7.0m, representing only 3.6% of FY Bloomberg estimates. Lower gross profit, larger operating expenses and finance costs, and decrease in share of profits from associates and JVs together took earnings down. Revenue was down 22.0% to $122.0m due in part to completion of Tomlinson Heights condominium, gross margin down 1.5 ppt to 25.4% to rake in $30.9m in gross profits (-26.4% y/y). Decrease in share of results from associates came from lower profits from The Interlace condominium, and higher finance costs resulted from higher borrowings. Market outlook is challenging, with no major contributions from new projects in view. Stock trades at 1.35x P/B