Hotel operator Shangri-La Asia’s FY20 results came in below expectations of OCBC’s analyst Chu Peng, due to higher operating expenses and a weak operating environment.
However, with the expectations of recovery from the pandemic-hit year, Chu has maintained her buy call on the stock but with a higher fair value of HK$9.74, from HK$7.02 previously.
“We saw some recovery in 2H20, mainly driven by Mainland China. As vaccination drive kicks in, we expect a gradual recovery ahead, but near-term challenges remain as it will take time for countries to achieve herd immunity,” writes Chu in her March 29 report.
“We expect countries with large domestic markets such as China, Australia, Japan to lead the recovery. Countries with relatively stable infection rates and faster vaccine rollout rates such as Singapore could benefit from travel bubbles and a gradual opening of borders,” she adds.
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For FY2020 ended Dec 31 2020, the hotel operator announced losses of US$460.2 million on the back of 57.5% y-o-y drop in revenue to just over US$1 billion. The company reported earnings of US$152.5 million for the preceding FY2019.
To conserve cash, no dividend has been declared for FY2020, versus 8 HK cents for the preceding FY2019.
As at 4.11 pm, Shangri-La Asia shares traded at HK$7.82, down 1.39% for the day.
