- Since coming on board GLL one and a half years ago, Mike Denoma had implemented an overhaul and revamp of the group’s hotels, including the introduction of new brands, decentralising decision-making to the hotel level, asset enhancement across the group’s flagship properties and driving down central administrative costs. These efforts had resulted in a 61% improvement in hotel operating profit to US$28.8m in 1HFY15 despite the impact of substantial rooms taken out of inventory due to the hotel refurbishment program.
- Among the two hotels that the company had rebranded and refurbished, the rankings in Tripadvisor’s top London hotels had climbed from 220th to number 4 in the case of Charing Cross and 475th to 52th in the case of Piccadilly.
- The refurbishment of the 670-room Marble Arch is expected to be completed in October 2015 while the group is exploring development options for the 800-room Tower hotel.
- Coupled with the interest savings from the refinancing of its mortgage debentures, we expect the earnings momentum for the group to be strong and sustained over the next 2 years.
- GLL is also focused on divesting its Clermont Club casino operation, which has been a drag on the group in the last half year.
- The group is also reviewing options to divest its property in Molokai Island, which currently has a book value of US$177m.
- Overall, we expect the group to report a better set of FY15 results, with further improvement in FY16 due to the on-going improvement in the hotel business.
- We continue to maintain our BUY recommendation on the stock with a $1.43 TP, premised on a 20% discount to our sum-of-parts valuation for the stock.
Analyst: Goh Han Peng
Source: http://www.rhbgroup.com/
Source: http://www.rhbgroup.com/
