Central Plaza Hotel

Central Plaza Hotel Plc (CENTEL)
 

In line with expectations: CENTEL posted a 4Q11 net
profit of Bt75m, down 15% YoY but up 135% QoQ.
Excluding a Bt74m provision for CTARAF (property
fund), core earnings would be Bt155m, strong growth of
58% YoY and 386% QoQ—in line with our estimate and
the consensus.
CENTEL announced a DPS of Bt0.15 (in line with our
assumption), a 1.3% yield. XD on April 29; payment on
May 22.
Results highlights: The strong 4Q11 earnings
growth—in the face of flooding in Bangkok—was driven
by ex-Bangkok hotels and the Food business. RevPar
expanded by 10% YoY and 21% QoQ (a 64%
occupancy rate in 4Q11 versus 60% in 4Q10 and 63%
in 3Q11). The Food operation posted TSSG of 25%
YoY and SSSG of 13% YoY. The top-line jumped by
15% YoY and 9% QoQ in 4Q11. Average GM in 4Q11
was 54%, stable YoY and 2% fatter QoQ. CENTEL’s
net gearing ratio declined slightly from 1.7x end-Sept
2011 to 1.6x at YE11.
Outlook: We anticipate impressive 1Q12 earnings,
driven by tourism high season and the Ootoya
restaurant chain (acquired in Sept 2011). The bottomline
for the quarter could post a new record high.
CENTEL’s QTD hotel occupancy rate is around 75%
(70% in 1Q11) and the mean room rate has increased
slightly, while the Food business has sustained strong
QTD YoY TSSG of above 20%.
What’s changed? We maintain our projections
unchanged. Note that our FY12 profit forecast is 13%
ahead of the consensus.
Recommendation: Our TRADING BUY rating stands
with an unchanged YE12 target price of Bt13.40, based
on a 20% discount to DCF value (WACC of 13.5% and
a 2% terminal growth rate). CENTEL is expected to
deliver 50% core profit growth for FY12 following its
FY11 turnaround. The balance sheet will strengthen, as
there isn’t any substantial CAPEX planned within the
next couple of years. ROE expansion (from single digits
in FY11 to 16% in FY12, in line with peers) will
encourage a re-rating. CENTEL trades at FY12 PEG of
0.3x, far below MINT’s PEG of 1.0x.