Central Plaza Hotel
4Q15: In line with SCBS but missed market BUY
Central Plaza Hotel Plc (CENTEL)
4Q15 net profit was Bt302mn (Bt0.22/share), down 37% YoY up 3% QoQ.
Excluding a Bt103mn extra item of revaluation on investment in 4Q14, core profit fell 19% YoY but rose 3% QoQ. The result was in line with SCBS estimate but was 15% below market estimates. This brought 2015 net profit to Bt1.7bn, up 41% YoY.
4Q15 highlights:
- 4Q15 revenue was Bt4.9bn, up 3% YoY but down 12% QoQ. The hotel business (47% of revenue) was key to revenue growth (+4% YoY and 21% QoQ) while the food business (53% of revenue) grew moderately (revenue growth: 2% YoY and 5% QoQ). For 2015, CENTEL’s revenue was Bt18.8bn, up 5% YoY.
- Hotel business: 4Q15 revenue per available room (RevPar) was Bt4,024/room/night, flat YoY but up 22% QoQ, backed by an 80% occupancy rate (down from 81% in 4Q14 and flat QoQ) and an increase in average room rate of 2% YoY and 22% QoQ. The weak RevPar was due to poorer operations in Maldives caused by renovations at Centara Grand Island Resort & Spa that are taking longer than expected, winding up in December 2015 not the planned October 2015. For 2015, RevPar growth was 7% YoY with hotels in Bangkok doing best, at +38% YoY.
- Food business: Same-store sales (SSS) growth turned positive at 0.2% in 4Q15, from a 3.1% contraction in 3Q15, driven by key brands KFC and Mister Donut. For 2015, SSS was -0.7% vs. +1.4% in 2014. It had 792 outlets as of December 2015, up 1% YoY.
EBITDA margin was 29% in 4Q15, down from 30.1% in 4Q14 but up from 19.6% in 3Q15. For 2015, EBITDA margin was 25.2%, up from 22.8% in 2014.
- Interest-bearing debt to equity was 0.9x as of December 2015, higher than 0.7x as of September 2015.
Operations are better. CENTEL’s share price will be under pressure in the near term after missing market expectations in 4Q15. However, looking past this, its operations are showing clear improvement. According a recent discussion with management, February has been looking better with occupancy rate at its Maldives hotel from February 1-11 at above 80% and overall RevPar in double-digit YoY growth. For its food business, SSS growth was 0.7% in January. We currently rate BUY on CENTEL with a TP of Bt44/share.
