Global Premium Hotels

Global Premium Hotels’ (GPH) 3Q14 results were broadly in line with the prospects statement made in the group’s 2Q14 financial results announcement, with net profit inching up 3.3% to $5.1m, taking 9M14 net profit to $12.9m (-9.1%). Revenue for the quarter rose 9.3% to $17.2m, led by a 9.2% rise in hotel room revenue to $16.9m, as a result of full quarter contributions of $2.9m from Parc Sovereign Hotel – Trywhitt and $0.1m from Fragrance Hotel – Pearl. This was partially offset by lower revenue of $1.3m from the remaining hotels, and the closure of Fragrance Hotel – Elegance in 4Q13 due to cessation of tenancy agreement. Bottom-line was weighed by an 18% rise in admin expenses to $6.6m, attributable to higher staff costs, depreciation and property tax. While the group expects to remain profitable for the rest of 2014, it guides that tourist arrivals to Singapore continue to decline, with a 3.3% drop y/y from Jan to Aug ’14, on back of a slowing global economy. This, coupled with new supply rooms coming into the market, has led to a 0.8% y/y decline to 86% for average occupancy rates across the country. With no catalyst in sight in the immediate term to attract international travellers to Singapore, GPH do not foresee any significant change in the tourist arrivals number till end of the year. At the current price, GPH trades at 0.54x P/B