SINGAPORE (Feb 27): Earnings of resort-developer Banyan Tree soared 127% to $12.8 million for 4QFY2019 ended December from $5.6 million a year ago, following higher revenue contributions across its business operations.
Revenue for the quarter was up 71% to $158.5 million. Income from property sales was up three-fold to $92.4 million, following the completion of its Cassia Phuket condominiums which recognised revenue from 188 units.
Hotel investments generated $48.1 million, 1% higher than 4QFY2018 on income from the addition of 45 rooms to Banyan Tree Phuket. However, the segment was partially hit by an under performance of its hotels in Maldives due to stiff competition from new luxury hotels that opened there last year.
Meanwhile, its fee-based segment expanded 19% to $18.1 million on higher royalties earned from its residential project in Mexico and higher license fees from operations in China.
However, other income sources decreased by 98.4% to $0.4 million due to the higher base of 4QFY2018 which benefitted from gains from dilution of interest in Banyan Tree Assets (China) and the disposal of assets in Seychelles.
Overall, Banyan Tree’s earnings for FY2019 tumbled 95.2% to $651,000 from $13.5 million in FY2018.
This translates to earnings per share (EPS) of 0.08 cents compared to 1.52 cents in FY2018.
Revenue for the year inched up by 5% to $346.9 million, following the receipt of deposits of $115.9 million for 337 units. This was mitigated by contractions in its hotel investments (10%) and fee-based operations (1%).
Other income was down 87% to $5.8 million from the absence of dilution interests.
In this time, expenses were up by 3% to $296.6 million, following a 38% increase in the cost of properties sold. The impact of this was softened by declines in sales and marketing expenses (-20%), salaries and related expenses (-3%) and other operating expenses (-5%).
As at end December, cash and cash equivalents were at $130.8 million, from $206.2 million in FY2018.
Meanwhile, net asset value increased by 4% to $747.4 million, on the back of net re-valution gains from its Thailand properties.
No dividend was declared for the full year, as opposed to a final dividend of 1.05 cents a year ago.
For now, the group expects the Covid-19 outbreak to weigh on its hotel and resort-related segments in the near to medium term. This comes as consumers cut back on travel, causing international tourism numbers to shrink and forward bookings for hotels to get cancelled.
So far, it has seen a 15% drop in forward bookings – led by China (47% drop) and Asia (6% drop). Meanwhile bookings from the Americas is up 11%.
To this end, Eddy See, Banyan Tree's president and group managing director, says the group has prepared for the outbreak with the same prudent cash-preservation measures used during other global crises such as SARS in 2003 and the different financial crises.
See is also looking to woo more European guests, who share a similar percentage to the proportion of its Chinese guests. However, he is aware that these guests may be mindful of travelling given the rapid spread of the virus globally.
With its track record of 27 completed deals in 2019, the group is en route to secure 46 hotels in the next four years and 30 deals annually as part of its mission to double its footprint by 2025. It already has a steady pipeline for this year with new resorts slated to open across Thailand, Malaysia, Indonesia, China, Cambodia, Qatar and Greece.
As at 4.59pm, shares at Banyan Tree were down 6.7% at $0.35.
