Global Premium Hotels (GPH) performed in line with our expectations in 4Q12. 4Q12 revenue increased by 6.8% YoY to S$15.2m. EBIT margin fell 1.4 ppt YoY to 50.7%, partially due to increase in staff costs in relation to the general wage increases and additional staff required for Fragrance Riverside. As part of comprehensive income in 4Q12, revaluation of the land and hotel buildings led to a gain of S$83.7m, equivalent to 10.1% of 30 Sep 2012's PPE. The revaluation gain contributed to a dramatic 25% QoQ climb in NAV per share to 38.98 S cents. Lowering our capitalisation rates, which were previously too conservative, especially given that the majority of GPH's properties are freehold, we raise our FV from S$0.29 to S$0.33 (using a 10% discount to RNAV) and maintain a BUY on GPH. GPH is trading at an undemanding P/B of 0.69x.
4Q12 results in line
Global Premium Hotels (GPH) performed in line with our expectations in 4Q12. 4Q12 revenue increased by 6.8% YoY to S$15.2m, while gross profit margin declined 1.4 ppt YoY to 86.1%. EBIT margin fell 1.4 ppt YoY to 50.7%, partially due to increase in staff costs in relation to the general wage increases and additional staff required for Fragrance Riverside. Hotel room revenue increased by S$1.2m YoY, due mainly to a S$1.4m increase in revenue from Fragrance Emerald (underwent renovations in late 2011), Parc Sovereign Hotel, and Fragrance Riverside (latter two hotels opened in Feb 2011 and Nov 2011 respectively). The performance of the remaining hotels was affected by the temporary closure of Fragrance Ruby for an asset enhancement initiative.
FY12 dividend yield of 5.2%
As we expected, FY12 DPU is 1.4 S cents, translating into a dividend yield of 5.2% (80% payout ratio of net profit after tax). Management has not yet articulated dividend policy for FY13 and beyond. We assume a payout ratio of 10%, giving a FY13F dividend yield of 0.6%.
Asset value play
As part of comprehensive income in 4Q12, revaluation of the land and hotel buildings led to a gain of S$83.7m, equivalent to 10.1% of 30 Sep 2012's PPE. The revaluation gain contributed to a dramatic 25% QoQ climb in NAV per share to 38.98 S cents. 22 of the 23 hotels run by GPH are wholly owned by the group (including one Parc Sovereign Mid-tier hotel); 19 are on freehold sites, one is on a 999-year leasehold site and two are on 99-year leasehold sites. While we are cautious about the 1H13 outlook for the Singapore hospitality sector, GPH is trading at an undemanding P/B of 0.69x.
Maintain BUY
Lowering our capitalisation rates, which were previously too conservative, especially given that the majority of GPH's properties are freehold, we raise our FV from S$0.29 to S$0.33 (using a 10% discount to RNAV) and maintain a BUY on GPH.
Global Premium Hotels (GPH) performed in line with our expectations in 4Q12. 4Q12 revenue increased by 6.8% YoY to S$15.2m, while gross profit margin declined 1.4 ppt YoY to 86.1%. EBIT margin fell 1.4 ppt YoY to 50.7%, partially due to increase in staff costs in relation to the general wage increases and additional staff required for Fragrance Riverside. Hotel room revenue increased by S$1.2m YoY, due mainly to a S$1.4m increase in revenue from Fragrance Emerald (underwent renovations in late 2011), Parc Sovereign Hotel, and Fragrance Riverside (latter two hotels opened in Feb 2011 and Nov 2011 respectively). The performance of the remaining hotels was affected by the temporary closure of Fragrance Ruby for an asset enhancement initiative.
FY12 dividend yield of 5.2%
As we expected, FY12 DPU is 1.4 S cents, translating into a dividend yield of 5.2% (80% payout ratio of net profit after tax). Management has not yet articulated dividend policy for FY13 and beyond. We assume a payout ratio of 10%, giving a FY13F dividend yield of 0.6%.
Asset value play
As part of comprehensive income in 4Q12, revaluation of the land and hotel buildings led to a gain of S$83.7m, equivalent to 10.1% of 30 Sep 2012's PPE. The revaluation gain contributed to a dramatic 25% QoQ climb in NAV per share to 38.98 S cents. 22 of the 23 hotels run by GPH are wholly owned by the group (including one Parc Sovereign Mid-tier hotel); 19 are on freehold sites, one is on a 999-year leasehold site and two are on 99-year leasehold sites. While we are cautious about the 1H13 outlook for the Singapore hospitality sector, GPH is trading at an undemanding P/B of 0.69x.
Maintain BUY
Lowering our capitalisation rates, which were previously too conservative, especially given that the majority of GPH's properties are freehold, we raise our FV from S$0.29 to S$0.33 (using a 10% discount to RNAV) and maintain a BUY on GPH.
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