Hotel Properties' profit plunged 70% in Q3 to $15.1m

There were no contributions from Tomlinson Heights.

Hotel Properties Limited reported that its net profit plunged 70% year-on-year to $15.1m in Q3, mostly brought about by the lack of contributions from the Tomlinson Heights condominium, which had achieved temporary occupancy permit way back in the first quarter.

According to OCBC, HPL’s results were also impacted by the lower share of results from its associate companies and joint ventures, which decreased to $0.3m as the Interlace achieved TOP in September 2013.

However, the figures from HPL’s hotels and resorts division remained resilient. Its resorts in Maldives and Bali reported particularly strong contributions.

“9M14 PATMI now makes up 88% of our full year forecast and we judge 3Q14 figures to be in line with expectations. Our investment thesis for HPL continues to be underpinned by significantly under-valued prime Orchard assets in the group’s real estate portfolio portfolio which are ripe for potential redevelopment. To reflect the uncertainty of redevelopment ahead, however, we opt to assign a punitive 35% discount to HPL’s RNAV of S$8.20 per share, which yields a fair value estimate of S$5.32,” noted OCBC.

Here’s more from OCBC:

Management noted that the group’s hotels and resorts typically perform well in the last quarter of the year, though possible headwinds could appear through political uncertainties and the potential escalation of the Ebola outbreak.

In London, the group has commenced soft marketing of apartments at Burlington Gate and Campden Hill and income from these will be recognized on a COC basis on completion. 

In Singapore, however, the group highlights that sentiments in the residential market remain weak, with both transaction volumes and prices declining.

The group’s balance sheet remained firm as at end Sep 2014 with S$129.3m in cash and 49.2% net gearing.