AMARA HOLDINGS LTD
A34.SI
Amara Holdings - 3Q17 Revenue Yet To Reflect Upcoming New Hotel
- Amara Holdings' 3Q17 earnings are in line with expectations. 3Q17 net profit of SGD3.2m was down 20% YoY mainly due to start-up costs for the upcoming Amara Signature Shanghai. Management is guiding for Amara Signature Shanghai to begin operating in Dec 2017, which will help drive revenue for 2018.
- In addition, lower supply of new hotel rooms in Singapore (amidst rising visitor arrivals) should help Amara improve its occupancy and room rates at Amara Singapore and Amara Sanctuary.
- Amara has an RNAV of SGD1.36/share, which implies P/RNAV of 0.41x.
- Maintain BUY with TP of SGD0.88, pegged to P/RNAV of 0.65x.
Amara Holdings (Amara) reported 3Q17 net profit of SGD3.2m, down 20% YoY.
- 3Q17 staff costs rose 19% to SGD7.0m, mainly due to an increase in start-up costs or the upcoming Amara Signature Shanghai hotel. 9M17 net profit of SGD6.3m accounted for 62% of our 2017 forecast of SGD10.1m.
- We view the results as in line.
Higher occupancy rate at Amara Singapore.
- Management indicated that the occupancy rate at Amara Singapore was at 89.1% as at 9M17, higher than 9M16’s 87.4%. Management is of the view that Amara Singapore’s occupancy rate in 4Q17 could exceed the rate achieved during 9M17.
- Amara Bangkok’s occupancy rate during 9M17 of 87.6% was also an improvement over 9M16’s 80.2%.
Reduction in new Singapore hotel room supply in 2018.
- According to an article in The Business Times last month, only 266 new hotel rooms are expected to be added in 2018 (2017: 3,174). The lower projected supply could help raise 2018 average room rate (ARR) amidst mid-single-digit 2018 visitor arrival growth.
Significant valuation surpluses.
- The group’s balance sheet reflects only the cost of its hotels. There are several significant valuation upsides for Amara Singapore, Amara Sanctuary Resort Sentosa, and Amara Signature Shanghai.
- Factoring in the unrealised valuation upsides, Amara has an RNAV of SGD1.36 per share, giving a P/RNAV of 0.41x.
2018 net profit to be driven by hotel in Shanghai.
- Our 2017 net profit forecast of SGD10.1m is flat vs 2016’s adjusted SGD10m – this is after stripping off the 2016 one-time joint venture gain of SGD28m.
- 2018F net profit is expected to expand by 35%, with stronger Singapore ARR and a full 12-month contribution from Amara Signature Shanghai.
Leng Seng Choon CFA
RHB Invest
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http://www.rhbinvest.com.sg/
2017-11-14
RHB Invest
SGX Stock
Analyst Report
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