SINGAPORE (Nov 15): RHB is maintaining its “buy” call on Amara Holdings with a target price of 88 cents.
This came despite the group announcing on Monday 3Q17 earnings dropped 20% to $3.2 million due to higher cost incurred.
Revenue for the quarter was up by 12% to $22.2 million from $19.8 million a year ago, mainly due to higher revenue contributions from the group’s Hotel Investment and Management segment and Property Investment and Development segment.
See: Amara posts 20% lower 3Q earnings of $3.2 mil on higher costs
The group’s management says that occupancy rate at Amara Singapore was at 89.1% as at 9M17, higher than 87.4% recorded in the same period last year.
Hence, management expects the occupancy rate in the next quarter could exceed 9M17.
Meanwhile, Amara Bangkok also showed improvement in occupancy rate in 9M17 at 87.6% compared to 80.2% in 9M16.
In a Tuesday report, analyst Leong Seng Choon says that according to Business Times last month, the group is only expected to add 266 new rooms in 2018, compared to 3,174 in 2017.
“The lower projected supply could help raise 2018 average room rate (ARR) amidst mid-single-digit 2018 visitor arrival growth,” says Leong.
The analyst’s net profit forecast of $10.1 million for 2017 is flat compared to 2016’s adjusted $10 million, and this is after stripping off the 2016 one-time joint venture gain of $28 million.
However, net profit for 2018F is expected to expand by 35%, with strong Singapore ARR and a full 12-month contribution from Amara Signature Shanghai.
As at 1.55pm, shares in Amara are trading at 54 cents or 0.84 times FY17 book with a dividend yield of 1.8%.
