Central Plaza Hotel
Central Plaza Hotel Buy (17E TP Bt42.75)
Company Update
Close Bt35.00
Tourism & Leisure May 22, 2017
Earnings upgrade/Earnings downgrade/Overview unchanged
Lower hotel guidance on soft overseas performance Price Performance (%)
Source: SET Smart
FY17
FY18
Consensus EPS Bt)
1.517
1.686
KT ZMICO vs. consensus Share data
6.8%
0.8%
Reuters / Bloomberg
CENT.BK/CENTEL TB
Paid‐up Shares (m)
1,350.00
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
47.00/1,376.00
Foreign limit / actual (%)
40.00/14.46
52 week High / Low (Bt)
44.00/34.00
Avg. daily T/O (shares 000) NVDR (%)
1,871.00 2.46
Estimated free float (%)
51.66
Beta
0.94
URL
www.centarahotelsresorts.com
CGR
Anti‐corruption
Level 4 (Certified)
Anapat Wanuschaiyapruk Analyst, no. 57076 [email protected] 66 (0) 2-624‐6289
Thailand operation still strong…maintain Buy on high upside We revise down our forecast for the hotel operation in the Maldives as oversupply of resorts still looms. We expect RevPAR in the Maldives to drop by 3.9% this year and be flat next year. Our core profit is revised down by 7% and 1% for 17E and 18E, respectively. However, business in Thailand, which represents 91% of total revenue, remains resilient and we reaffirm our Buy recommendation with a new TP at Bt42.75, offering 22% upside. RevPAR guidance revised down by 1% RevPAR in 1Q17 dropped by 1.1%YoY due to the poor performance in the Maldives, which saw RevPAR decline by 12%YoY. Management has consequently lowered its RevPAR growth guidance from 3% ‐ 4% to 2% ‐ 3%, while still believing that Thailand tourism has a resilient outlook. We expect RevPAR for Bangkok and upcountry this year to grow by 3.0%YoY and 2.9%YoY while RevPAR for the Maldives will drop by 3.9%. Hotel revenue is forecasted to grow by 2.5%YoY. The EBITDA margin should be quite flat at 31.7%. CENTEL is developing COSI hotel in Samui and Pattaya. COSI at Samui is expected to begin operating by around yearend. If successful, we should see acceleration of expansion of this segment in 2019. Waiting for inorganic growth for food business CENTEL plans to add another 36 outlets (+4%YoY) this year, consisting of 18 KFC, seven Auntie Anne’s, eight Katsuya, and seven Pepper Lunch. Even though CENTEL started the year with poor SSS growth at ‐1.3%YoY, we believe SSS growth for the full year will end up at around 1.1% ‐ 1.2% and the top line will grow by 4.7% as acceleration should be seen in 2H17 from the low base in 4Q16 (SSS dropped by 5.6%YoY). We forecast the EBITDA margin to grow by 13.7% due to SSS improvement and cost control. The highlight for the food business is the potential acquisition of KFC outlets from Yum. The deal is scheduled to be finalized in Sep‐17 and we believe CENTEL is a potential candidate. 2Q17E to show improvement in hotel operation As Easter fell in April rather than March this year, RevPAR of domestic hotels in April soared by double‐digit percentage points. There was also some improvement in the Maldives as RevPAR turned positive by a very low single‐ digit percentage. However, management expects a soft food business due to the high base last year. Financials and Valuation FY Ended 31 Dec Revenues (Btmn) Core profit (Btmn) Core EPS (Bt) Core E S growth (%) Dividend (Bt) BV (Bt) FY Ended 31 Dec PER (x) EV/EBITDA (x) PBV (x) Dividend yield (%) ROE (%) Net gearing (%)
2014 17,851 1,188 0.88 ‐10.1% 0.40 6.00 2014 39.76 12.71 5.84 1.1% 12.8% 109%
2015 18,823 1,676 1.24 41.0% 0.50 6.86 2015 28.20 11.20 5.10 1.4% 19.3% 82%
2016 19,448 1,850 1.37 10.4% 0.55 7.71 2016 25.55 11.19 4.54 1.6% 18.8% 59%
2017E 20,237 2,061 1.62 18.2% 0.61 8.68 2017E 22.92 10.53 4.03 1.7% 18.6% 41%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 5
2018E 21,044 2,339 1.77 9.3% 0.69 9.81 2018E 20.20 9.81 3.57 2.0% 18.7% 21%
2019E 21,722 2,620 1.94 9.6% 0.78 11.05 2019E 18.04 9.21 3.17 2.2% 18.6% 0%
Figure 1: Bangkok occupancy rate 100%
85% 84%
Figure 2: Bangkok RevPAR
80%
(Baht) 3,500
85%
79%
77%
‐0.7% +8.3%
3,000
+5.7%
+3.3%
+0.1%
Q2
Q3
Q4
2,500
60%
2,000 40%
1,500 1,000
20%
500 0%
0 Q1
Q2 2014
Q3
2015
2016
Q4
Q1 2014
2017
Source: CENTEL, KT Zmico Research
2015
2016
2017
Source: CENTEL, KT Zmico Research
Figure 3: Upcountry occupancy rate 100%
Figure 4: Upcountry RevPAR (Baht)
88%86%
82%
78%
80%
+3.8% +0.7%
5,000
79%
4,000 60%
‐2.2%
3,000
40%
+0.7%
+2.9%
Q2
Q3
2,000
20%
1,000
0%
0 Q1
Q2 2014
Q3
2015
2016
Q4
Q1 2014
2017
Source: CENTEL, KT Zmico Research
2015
2016
Q4
2017
Source: CENTEL, KT Zmico Research
Figure 5: Upcountry occupancy rate 100%
85%
Figure 6: Upcountry RevPAR 92%
(Baht)
88%
82%
81%
25,000
+6.6% ‐11.8%
80% 20,000 60%
15,000
40%
0.0%
+5.0%
+8.2%
10,000
20%
5,000
0%
0 Q1
Q2 2014
Q3
2015
2016
Q4
Q1
Q2 2014
2017
Source: CENTEL, KT Zmico Research
2015
Q3 2016
Q4
2017
Source: CENTEL, KT Zmico Research
Figure 7: Food same‐store‐sale growth
Figure 8: Food outlet (Outlet)
15.0%
Top 4
Other
Source: CENTEL, KT Zmico Research
Total
Top 4
Other
Source: CENTEL, KT Zmico Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 5
1Q17
4Q16
3Q16
2Q16
1Q16
4Q15
3Q15
2Q15
1Q15
1Q17
4Q16
3Q16
2Q16
1Q16
4Q15
3Q15
2Q15
1Q15
4Q14
3Q14
2Q14
1Q14
‐15.0%
4Q14
‐5.0% ‐10.0%
3Q14
0.0%
2Q14
5.0%
1Q14
800 708 730 721 670 684 690 699 697 693 693 696 702 704 700 600 500 400 300 200 82 83 83 82 80 81 81 89 98 97 98 100 99 100 0
10.0%
Figure 9: Assumption 2013 77.5% 80.3% 84.8%
Hotel Occupancy rate Bangkok Upcountry Maldives RevPAR growth Bangkok Upcountry Maldives Food Outlets Top 4 brands Other SSS growth Top 4 brands Other Revenue breakdown Hotel Growth Food Growth EBITDA margin Hotel Food
2014 61.6% 78.9% 90.6%
2015 81.3% 79.6% 86.2%
‐20.2% +0.8% +21.3%
699 82
7,950 ‐1.1% 9,901 9.3%
9,059
32.3% 13.1%
33.0% 9.4%
+1.5% +1.5%
+1.5% +1.5%
9,143 2.5% 11,094 4.7%
9,291 1.6% 11,753 5.9%
9,442 1.6% 12,279 4.5%
31.7% 13.0%
Sources: ERW, KT Zmico Research
760 120
32.6% 12.4%
760 120
+1.0% +1.5%
8,919 2.2% 10,597 4.2%
+2.0% +2.0% +0.0%
745 110
+2.0% +2.0% +0.0%
‐1.2% +3.7%
8,728 9.8% 10,170 2.7%
2019E 82.0% 82.5% 85.0%
730 100
2018E 82.0% 82.5% 85.0%
+3.0% +2.9% ‐3.9%
‐1.4% +6.1%
8,037
701 91
+1.8% ‐2.8%
2017E 82.0% 82.5% 85.0%
+4.3% +0.5% +1.2%
+1.6% ‐7.2%
+37.8% +1.6% +4.3%
660 83
2016 81.2% 81.8% 86.7%
31.7% 13.7%
31.7% 14.9%
31.7% 15.7%
Figure 10: CENTEL’s PER band
Figure 11: CENTEL’s PBV band
(X)
(X)
+2 S.D.
10.0
45
8.0
35
+2 S.D.
7.0
Avg.
+1 S.D.
6.0 5.0
25
Avg.
4.0 -1 S.D.
3.0 2.0
Source: Bloomberg, KT Zmico Research
Source: Bloomberg, KT Zmico Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 5
Jan-17
Jul-16
Jan-16
Jul-15
Jan-15
Jul-14
Jan-17
Jul-16
Jan-16
Jul-15
Jan-15
Jul-14
Jan-14
0.0
Jul-13
Jan-13
Jul-12
Jan-12
Jul-11
Jan-11
-2 S.D.
1.0
Company Update
Close Bt35.00
Tourism & Leisure May 22, 2017
Earnings upgrade/Earnings downgrade/Overview unchanged
Lower hotel guidance on soft overseas performance Price Performance (%)
Source: SET Smart
FY17
FY18
Consensus EPS Bt)
1.517
1.686
KT ZMICO vs. consensus Share data
6.8%
0.8%
Reuters / Bloomberg
CENT.BK/CENTEL TB
Paid‐up Shares (m)
1,350.00
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
47.00/1,376.00
Foreign limit / actual (%)
40.00/14.46
52 week High / Low (Bt)
44.00/34.00
Avg. daily T/O (shares 000) NVDR (%)
1,871.00 2.46
Estimated free float (%)
51.66
Beta
0.94
URL
www.centarahotelsresorts.com
CGR
Anti‐corruption
Level 4 (Certified)
Anapat Wanuschaiyapruk Analyst, no. 57076 [email protected] 66 (0) 2-624‐6289
Thailand operation still strong…maintain Buy on high upside We revise down our forecast for the hotel operation in the Maldives as oversupply of resorts still looms. We expect RevPAR in the Maldives to drop by 3.9% this year and be flat next year. Our core profit is revised down by 7% and 1% for 17E and 18E, respectively. However, business in Thailand, which represents 91% of total revenue, remains resilient and we reaffirm our Buy recommendation with a new TP at Bt42.75, offering 22% upside. RevPAR guidance revised down by 1% RevPAR in 1Q17 dropped by 1.1%YoY due to the poor performance in the Maldives, which saw RevPAR decline by 12%YoY. Management has consequently lowered its RevPAR growth guidance from 3% ‐ 4% to 2% ‐ 3%, while still believing that Thailand tourism has a resilient outlook. We expect RevPAR for Bangkok and upcountry this year to grow by 3.0%YoY and 2.9%YoY while RevPAR for the Maldives will drop by 3.9%. Hotel revenue is forecasted to grow by 2.5%YoY. The EBITDA margin should be quite flat at 31.7%. CENTEL is developing COSI hotel in Samui and Pattaya. COSI at Samui is expected to begin operating by around yearend. If successful, we should see acceleration of expansion of this segment in 2019. Waiting for inorganic growth for food business CENTEL plans to add another 36 outlets (+4%YoY) this year, consisting of 18 KFC, seven Auntie Anne’s, eight Katsuya, and seven Pepper Lunch. Even though CENTEL started the year with poor SSS growth at ‐1.3%YoY, we believe SSS growth for the full year will end up at around 1.1% ‐ 1.2% and the top line will grow by 4.7% as acceleration should be seen in 2H17 from the low base in 4Q16 (SSS dropped by 5.6%YoY). We forecast the EBITDA margin to grow by 13.7% due to SSS improvement and cost control. The highlight for the food business is the potential acquisition of KFC outlets from Yum. The deal is scheduled to be finalized in Sep‐17 and we believe CENTEL is a potential candidate. 2Q17E to show improvement in hotel operation As Easter fell in April rather than March this year, RevPAR of domestic hotels in April soared by double‐digit percentage points. There was also some improvement in the Maldives as RevPAR turned positive by a very low single‐ digit percentage. However, management expects a soft food business due to the high base last year. Financials and Valuation FY Ended 31 Dec Revenues (Btmn) Core profit (Btmn) Core EPS (Bt) Core E S growth (%) Dividend (Bt) BV (Bt) FY Ended 31 Dec PER (x) EV/EBITDA (x) PBV (x) Dividend yield (%) ROE (%) Net gearing (%)
2014 17,851 1,188 0.88 ‐10.1% 0.40 6.00 2014 39.76 12.71 5.84 1.1% 12.8% 109%
2015 18,823 1,676 1.24 41.0% 0.50 6.86 2015 28.20 11.20 5.10 1.4% 19.3% 82%
2016 19,448 1,850 1.37 10.4% 0.55 7.71 2016 25.55 11.19 4.54 1.6% 18.8% 59%
2017E 20,237 2,061 1.62 18.2% 0.61 8.68 2017E 22.92 10.53 4.03 1.7% 18.6% 41%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 5
2018E 21,044 2,339 1.77 9.3% 0.69 9.81 2018E 20.20 9.81 3.57 2.0% 18.7% 21%
2019E 21,722 2,620 1.94 9.6% 0.78 11.05 2019E 18.04 9.21 3.17 2.2% 18.6% 0%
Figure 1: Bangkok occupancy rate 100%
85% 84%
Figure 2: Bangkok RevPAR
80%
(Baht) 3,500
85%
79%
77%
‐0.7% +8.3%
3,000
+5.7%
+3.3%
+0.1%
Q2
Q3
Q4
2,500
60%
2,000 40%
1,500 1,000
20%
500 0%
0 Q1
Q2 2014
Q3
2015
2016
Q4
Q1 2014
2017
Source: CENTEL, KT Zmico Research
2015
2016
2017
Source: CENTEL, KT Zmico Research
Figure 3: Upcountry occupancy rate 100%
Figure 4: Upcountry RevPAR (Baht)
88%86%
82%
78%
80%
+3.8% +0.7%
5,000
79%
4,000 60%
‐2.2%
3,000
40%
+0.7%
+2.9%
Q2
Q3
2,000
20%
1,000
0%
0 Q1
Q2 2014
Q3
2015
2016
Q4
Q1 2014
2017
Source: CENTEL, KT Zmico Research
2015
2016
Q4
2017
Source: CENTEL, KT Zmico Research
Figure 5: Upcountry occupancy rate 100%
85%
Figure 6: Upcountry RevPAR 92%
(Baht)
88%
82%
81%
25,000
+6.6% ‐11.8%
80% 20,000 60%
15,000
40%
0.0%
+5.0%
+8.2%
10,000
20%
5,000
0%
0 Q1
Q2 2014
Q3
2015
2016
Q4
Q1
Q2 2014
2017
Source: CENTEL, KT Zmico Research
2015
Q3 2016
Q4
2017
Source: CENTEL, KT Zmico Research
Figure 7: Food same‐store‐sale growth
Figure 8: Food outlet (Outlet)
15.0%
Top 4
Other
Source: CENTEL, KT Zmico Research
Total
Top 4
Other
Source: CENTEL, KT Zmico Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 5
1Q17
4Q16
3Q16
2Q16
1Q16
4Q15
3Q15
2Q15
1Q15
1Q17
4Q16
3Q16
2Q16
1Q16
4Q15
3Q15
2Q15
1Q15
4Q14
3Q14
2Q14
1Q14
‐15.0%
4Q14
‐5.0% ‐10.0%
3Q14
0.0%
2Q14
5.0%
1Q14
800 708 730 721 670 684 690 699 697 693 693 696 702 704 700 600 500 400 300 200 82 83 83 82 80 81 81 89 98 97 98 100 99 100 0
10.0%
Figure 9: Assumption 2013 77.5% 80.3% 84.8%
Hotel Occupancy rate Bangkok Upcountry Maldives RevPAR growth Bangkok Upcountry Maldives Food Outlets Top 4 brands Other SSS growth Top 4 brands Other Revenue breakdown Hotel Growth Food Growth EBITDA margin Hotel Food
2014 61.6% 78.9% 90.6%
2015 81.3% 79.6% 86.2%
‐20.2% +0.8% +21.3%
699 82
7,950 ‐1.1% 9,901 9.3%
9,059
32.3% 13.1%
33.0% 9.4%
+1.5% +1.5%
+1.5% +1.5%
9,143 2.5% 11,094 4.7%
9,291 1.6% 11,753 5.9%
9,442 1.6% 12,279 4.5%
31.7% 13.0%
Sources: ERW, KT Zmico Research
760 120
32.6% 12.4%
760 120
+1.0% +1.5%
8,919 2.2% 10,597 4.2%
+2.0% +2.0% +0.0%
745 110
+2.0% +2.0% +0.0%
‐1.2% +3.7%
8,728 9.8% 10,170 2.7%
2019E 82.0% 82.5% 85.0%
730 100
2018E 82.0% 82.5% 85.0%
+3.0% +2.9% ‐3.9%
‐1.4% +6.1%
8,037
701 91
+1.8% ‐2.8%
2017E 82.0% 82.5% 85.0%
+4.3% +0.5% +1.2%
+1.6% ‐7.2%
+37.8% +1.6% +4.3%
660 83
2016 81.2% 81.8% 86.7%
31.7% 13.7%
31.7% 14.9%
31.7% 15.7%
Figure 10: CENTEL’s PER band
Figure 11: CENTEL’s PBV band
(X)
(X)
+2 S.D.
10.0
45
8.0
35
+2 S.D.
7.0
Avg.
+1 S.D.
6.0 5.0
25
Avg.
4.0 -1 S.D.
3.0 2.0
Source: Bloomberg, KT Zmico Research
Source: Bloomberg, KT Zmico Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 5
Jan-17
Jul-16
Jan-16
Jul-15
Jan-15
Jul-14
Jan-17
Jul-16
Jan-16
Jul-15
Jan-15
Jul-14
Jan-14
0.0
Jul-13
Jan-13
Jul-12
Jan-12
Jul-11
Jan-11
-2 S.D.
1.0
