Banyan Tree

Banyan Tree: muted 1Q12 results. Revenue decreased by 27% YoY to $83m, due to i) lower revenue from Property Sales (no devt sites were sold during the qtr compared to 1Q11), and ii) lower revenue from the Hotel Investment segment following the sale of its Laguna Beach Resort (“LBR”) in Thailand in May ’11. Net profit increased by 19% YoY to $12.0m, mainly due to the net gain on bargain purchase of the remaining 70% stake in Banyan Tree Seychelles resort it does not own. Looking forward, mgt expects the next two quarters, being traditionally slow seasons, to remain challenging and “possibly a loss.” Says, currently, forward bookings for 2Q12 for owned hotels in Thailand on same store basis is 79% ahead of last year, bcs of uncertainties caused by the Thai elections in Jun ‘11. Forward bookings outside of Thailand however is 21% below last year due to the slower forward bookings in Maldives coupled with planned renovation at Banyan Tree and Angsana Maldives during the low season months. Overall, the Group’s forward bookings is ahead by 14%. For property sales in Thailand, mgt says sales of secondary holiday homes shows encouraging signs in 1Q12 but whether the trend will continue remains uncertain. Banyan Tree expects to open 6 new resorts and launch 11 spas under mgt, over the next 12 mths. The stock trades at 0.8x P/B. Trailing 12mth core earnings were negative hence P/E is not meaningful.