(SINGAPORE) Jan 23: Japan’s economy is enjoying a broad-based lift from the 2020 Tokyo Olympics to be held later this year.
However, for IPC Corporation, the slowing down in the growth of the hospitality industry in Japan is a reason to write-down fair value of its Japan hospitality business by $11.76 million.
IPC holds preference shares in a company called Nest Hotel Japan Corporation, which manages more than a dozen hotels in Japan.
As a result, the company, which used to sell computers before shifting into property, has reported a loss of $16.7 million for year ended Dec 31 2019, a sharp reversal from earnings of $25 million in FY2018.
Revenue in the same period dropped 60.5% y-o-y to $3.57 million.
Incidentally, the handsome earnings booked in FY2018 were because of hefty revaluation gains made on NHJC.
IPC, citing a report from Nikkei Asian Review on Jan 10 2020, states that the number of tourists to Japan in 2019 increased by just 2.2%, from an increase of 8.7% between 2017 and 2018.
In addition to the macro factors, IPC is likely to see slower revenue growth, as it has delayed the opening of two hotels which it will manage from 2020 to 2021.
Earlier this month, NHJC added a new hotel management contract, which brings to a total of 21 the number of hotels it will manage by end of 2022, including the Nest Hotel Osaka Umeda (picture).
According to IPC, the same independent external valuer, using the same methodology, was used to put a value to its assets for both FY2018 and FY2019.
IPC shares last traded at 30 cents on Jan 22, up from 28 cents at the beginning of the year.
As at Dec 31 2019, IPC’s book value was $1.03 per share, down from $1.25 as at Dec 31 2018.
