Central Plaza Hotel
Central Plaza Hotel Buy (16E TP Bt46.00)
Company update
Close Bt38.00
Tourism & Leisure November 4, 2015
Earnings upgrade/Earnings downgrade/Overview unchanged
Profit should remain strong in 3Q15 Price Performance (%)
Source: SET Smart
FY15
FY16
Consensus EPS (Bt)
1.273
1.468
KT ZMICO vs. consensus Share data
‐1.0%
7.6%
Reuters / Bloomberg
CENTEL.BK/CENTEL TB
Paid‐up Shares (m)
1,350.00
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
51.00/1,441.00
Foreign limit / actual (%)
40.00/11.72
52 week High / Low (Bt)
40.75/26.75
Avg. daily T/O (shares 000) NVDR (%)
2,634.00 2.44
Estimated free float (%)
46.63
Beta
1.31
URL
www.centarahotelsresorts.com
CGR
Anti‐corruption
Level 2 (Declared)
Maintain Buy rating While the improving occupancy of hotels in Thailand will be the key profit driver this year, we expect higher room rates from hotels in the Maldives and the better profitability from the restaurant business to remain the catalysts in 16E. With the stock price at 24x PE (‐0.3 SD.) and PE /EPS growth of 0.9x in ‘16E looking attractive, we roll over CENTEL’s DCF TP to Bt46 in 2016 and maintain our Buy call. Expect 3Q15 net profit to rise 69% YoY We expect CENTEL’s 3Q15 net profit at Bt285mn (EPS of Bt0.21), up 69% YoY and 16% QoQ. The hotel business will be the main driver, with RevPar rising 9% YoY to Bt3,311/night (hotels in Bangkok +31% YoY, upcountry and the Maldives both +7%). Average hotel occupancy should rise from 73% in 3Q14 to 80% in 3Q15. Restaurant revenue is expected to decline mildly by 1% YoY and same‐store sales should drop 3%, dampened by weak consumption and the high base last year from the promotion of Mister Donut. We expect the EBITDA margin to rise 223 bps YoY to 21.9%, with economies of scale, price hikes (most apparently at Maldives +18% YoY) and improving efficiency from closing down unprofitable restaurants as the catalysts. The 9M15 net profit should be Bt1.36bn, +92% YoY and accounting for 80% of our full‐year estimate. Higher room rates and improving margin of restaurants the catalysts We expect improving occupancy to continue in 4Q15‐16E, with growing tourists from East Asia and Europe and the reopening of renovated villas at the Grand Maldives with increasing rates in the Q4 high season being the catalysts. The improving profitability of the restaurant business should be another driver. We maintain our forecasts for profit growth of 43% in 15E and 25% in 16E and roll over the DCF TP to Bt46 in 2016 (WACC 9.8%, terminal growth 3%). Financials and Valuation FY Ended 31 Dec Revenues (Btmn) Core net profit (Btmn) Core EPS (Bt) Core EPS growth (%) Dividend (Bt) BV (Bt) FY Ended 31 Dec PER (x) EV/EBITDA (x) P/BV (x) Dividend yield (%) ROE (%) Net gearing (%)
Pornsawat Jirajarus Analyst no. 18228
2013 17,096 1,334 0.98 24.2% 0.39 7.35
2014 17,992 1,188 0.88 ‐10.1% 0.40 8.30
2015E 19,252 1,704 1.26 43.4% 0.50 8.86
2016E 21,062 2,136 1.58 25.3% 0.63 9.85
2017E 22,866 2,586 1.91 21.0% 0.77 11.05
2013 27.8 11.6 3.7 1.42% 13.69% 112.08%
2014 38.9 12.4 3.8 1.28% 11.13% 88.84%
2015E 30.1 12.2 4.3 1.33% 14.90% 65.44%
2016E 24.0 10.4 3.9 1.67% 16.90% 43.71%
2017E 19.9 9.2 3.4 2.02% 18.30% 23.10%
[email protected] 66 (0) 2624‐6257
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 5
Figure 1: Earnings preview Profit and Loss (Btmn) FY Ended 31 Dec Revenue Gross profit EBITDA Interes t expens e Other i ncome Income ta x Forex ga i n (l os s ) Other extra ordi na ry Items Gn (Ls ) from a ffi l i a tes Net profit (loss) Normalized profit (loss) Reported EPS (THB) Gros s ma rgi n (%) EBITDA ma rgi n (%) Net ma rgi n (%) Current ra ti o (x) Interes t covera ge (x) Debt /equi ty (x) BVPS (Bt) ROE (%)
3Q14 4,285 1,667 843 (111) 103 (39) 0 0 1 168 168 0.12 38.9 19.7 3.9 0.4 7.6 0.9 8.3 8.9
4Q14 4,897 1,950 1,193 (110) 200 (92) 0 34 (70) 477 443 0.35
1Q15 5,047 2,273 1,567 (99) 134 (115) 0 0 20 834 834 0.62
2Q15 4,491 1,741 923 (97) 58 (129) 0 0 8 246 246 0.18
3Q15E % YoY % QoQ 4,299 0.3 (4.3) 1,762 5.7 1.2 942 11.7 2.1 (97) (12.7) (0.4) 75 (27.2) 30.4 (93) 138.9 (27.9) 0 0.0 0.0 0 n.m. 0.0 10 n.m. 18.3 285 69.4 15.6 285 69.4 15.6 0.21 69.4 15.6
9M14 13,096 5,270 2,661 (345) 294 (274) 0 0 26 712 712 0.53
9M15E % YoY 13,837 5.7 5,776 9.6 3,431 29.0 (294) (14.8) 266 (9.5) (337) 23.0 0 0.0 0 n.m. 38 n.m. 1,365 91.8 1,365 91.8 1.01 91.8
2015E % YoY % YTD 19,252 7.0 71.9 8,032 11.2 71.9 4,450 15.5 77.1 (392) (13.8) 74.9 460 (6.9) 57.9 (457) 24.9 73.8 0 nm nm 0 nm nm 24 (155.6) 158.8 1,704 43.4 80.1 1,704 47.5 80.1 1.26 43.4 80.1
39.8
45.0
38.8
41.0
40.2
41.7
41.7
24.4
31.0
20.5
21.9
20.3
24.8
23.1
9.7
16.5
5.5
6.6
5.4
9.9
8.9
0.5
0.5
0.4
n.a.
0.3
n.a.
0.5
10.8
15.8
9.5
9.7
7.7
11.7
11.3
0.8
0.8
0.8
n.a.
1.0
n.a.
1.3
8.1
8.7
8.4
n.a.
8.2
n.a.
8.9
10.6
13.6
15.3
n.a.
9.3
n.a.
14.9
Source: CENTEL, KT ZMICO Research
Figure 2: Key operating figures ‐ Hotels
Figure 3: Key operating figures ‐ Restaurants
Avg. Room Rate (Bt /night) Avg. Occupancy Rate (%)
Avg. RevPar (Bt /night)
# of outlets
Same-store-sales growth
1,000
Bt per night
5,000
3,000 2,000 1,000 ‐
New outlets
16.0%
100%
14.0%
800
4,000
12.0%
80% 60%
2016F
2015F
2014
2013
2012
2011
2010
2009
2008
2007
8.0%
40%
400
20%
200
0%
10.0%
600
6.0% 4.0% 2.0%
0
0.0% 2010
2011
2012
2013F 2014F 2015F 2016F
Source: CENTEL, KT ZMICO Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 5
Figure 4: PE Band
Figure 5: PBV Band
(X) 8.0 +3 S.D.
7.0
+2 S.D.
5.0
+1 S.D.
4.0 3.0 2.0 1.0
Company update
Close Bt38.00
Tourism & Leisure November 4, 2015
Earnings upgrade/Earnings downgrade/Overview unchanged
Profit should remain strong in 3Q15 Price Performance (%)
Source: SET Smart
FY15
FY16
Consensus EPS (Bt)
1.273
1.468
KT ZMICO vs. consensus Share data
‐1.0%
7.6%
Reuters / Bloomberg
CENTEL.BK/CENTEL TB
Paid‐up Shares (m)
1,350.00
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
51.00/1,441.00
Foreign limit / actual (%)
40.00/11.72
52 week High / Low (Bt)
40.75/26.75
Avg. daily T/O (shares 000) NVDR (%)
2,634.00 2.44
Estimated free float (%)
46.63
Beta
1.31
URL
www.centarahotelsresorts.com
CGR
Anti‐corruption
Level 2 (Declared)
Maintain Buy rating While the improving occupancy of hotels in Thailand will be the key profit driver this year, we expect higher room rates from hotels in the Maldives and the better profitability from the restaurant business to remain the catalysts in 16E. With the stock price at 24x PE (‐0.3 SD.) and PE /EPS growth of 0.9x in ‘16E looking attractive, we roll over CENTEL’s DCF TP to Bt46 in 2016 and maintain our Buy call. Expect 3Q15 net profit to rise 69% YoY We expect CENTEL’s 3Q15 net profit at Bt285mn (EPS of Bt0.21), up 69% YoY and 16% QoQ. The hotel business will be the main driver, with RevPar rising 9% YoY to Bt3,311/night (hotels in Bangkok +31% YoY, upcountry and the Maldives both +7%). Average hotel occupancy should rise from 73% in 3Q14 to 80% in 3Q15. Restaurant revenue is expected to decline mildly by 1% YoY and same‐store sales should drop 3%, dampened by weak consumption and the high base last year from the promotion of Mister Donut. We expect the EBITDA margin to rise 223 bps YoY to 21.9%, with economies of scale, price hikes (most apparently at Maldives +18% YoY) and improving efficiency from closing down unprofitable restaurants as the catalysts. The 9M15 net profit should be Bt1.36bn, +92% YoY and accounting for 80% of our full‐year estimate. Higher room rates and improving margin of restaurants the catalysts We expect improving occupancy to continue in 4Q15‐16E, with growing tourists from East Asia and Europe and the reopening of renovated villas at the Grand Maldives with increasing rates in the Q4 high season being the catalysts. The improving profitability of the restaurant business should be another driver. We maintain our forecasts for profit growth of 43% in 15E and 25% in 16E and roll over the DCF TP to Bt46 in 2016 (WACC 9.8%, terminal growth 3%). Financials and Valuation FY Ended 31 Dec Revenues (Btmn) Core net profit (Btmn) Core EPS (Bt) Core EPS growth (%) Dividend (Bt) BV (Bt) FY Ended 31 Dec PER (x) EV/EBITDA (x) P/BV (x) Dividend yield (%) ROE (%) Net gearing (%)
Pornsawat Jirajarus Analyst no. 18228
2013 17,096 1,334 0.98 24.2% 0.39 7.35
2014 17,992 1,188 0.88 ‐10.1% 0.40 8.30
2015E 19,252 1,704 1.26 43.4% 0.50 8.86
2016E 21,062 2,136 1.58 25.3% 0.63 9.85
2017E 22,866 2,586 1.91 21.0% 0.77 11.05
2013 27.8 11.6 3.7 1.42% 13.69% 112.08%
2014 38.9 12.4 3.8 1.28% 11.13% 88.84%
2015E 30.1 12.2 4.3 1.33% 14.90% 65.44%
2016E 24.0 10.4 3.9 1.67% 16.90% 43.71%
2017E 19.9 9.2 3.4 2.02% 18.30% 23.10%
[email protected] 66 (0) 2624‐6257
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 5
Figure 1: Earnings preview Profit and Loss (Btmn) FY Ended 31 Dec Revenue Gross profit EBITDA Interes t expens e Other i ncome Income ta x Forex ga i n (l os s ) Other extra ordi na ry Items Gn (Ls ) from a ffi l i a tes Net profit (loss) Normalized profit (loss) Reported EPS (THB) Gros s ma rgi n (%) EBITDA ma rgi n (%) Net ma rgi n (%) Current ra ti o (x) Interes t covera ge (x) Debt /equi ty (x) BVPS (Bt) ROE (%)
3Q14 4,285 1,667 843 (111) 103 (39) 0 0 1 168 168 0.12 38.9 19.7 3.9 0.4 7.6 0.9 8.3 8.9
4Q14 4,897 1,950 1,193 (110) 200 (92) 0 34 (70) 477 443 0.35
1Q15 5,047 2,273 1,567 (99) 134 (115) 0 0 20 834 834 0.62
2Q15 4,491 1,741 923 (97) 58 (129) 0 0 8 246 246 0.18
3Q15E % YoY % QoQ 4,299 0.3 (4.3) 1,762 5.7 1.2 942 11.7 2.1 (97) (12.7) (0.4) 75 (27.2) 30.4 (93) 138.9 (27.9) 0 0.0 0.0 0 n.m. 0.0 10 n.m. 18.3 285 69.4 15.6 285 69.4 15.6 0.21 69.4 15.6
9M14 13,096 5,270 2,661 (345) 294 (274) 0 0 26 712 712 0.53
9M15E % YoY 13,837 5.7 5,776 9.6 3,431 29.0 (294) (14.8) 266 (9.5) (337) 23.0 0 0.0 0 n.m. 38 n.m. 1,365 91.8 1,365 91.8 1.01 91.8
2015E % YoY % YTD 19,252 7.0 71.9 8,032 11.2 71.9 4,450 15.5 77.1 (392) (13.8) 74.9 460 (6.9) 57.9 (457) 24.9 73.8 0 nm nm 0 nm nm 24 (155.6) 158.8 1,704 43.4 80.1 1,704 47.5 80.1 1.26 43.4 80.1
39.8
45.0
38.8
41.0
40.2
41.7
41.7
24.4
31.0
20.5
21.9
20.3
24.8
23.1
9.7
16.5
5.5
6.6
5.4
9.9
8.9
0.5
0.5
0.4
n.a.
0.3
n.a.
0.5
10.8
15.8
9.5
9.7
7.7
11.7
11.3
0.8
0.8
0.8
n.a.
1.0
n.a.
1.3
8.1
8.7
8.4
n.a.
8.2
n.a.
8.9
10.6
13.6
15.3
n.a.
9.3
n.a.
14.9
Source: CENTEL, KT ZMICO Research
Figure 2: Key operating figures ‐ Hotels
Figure 3: Key operating figures ‐ Restaurants
Avg. Room Rate (Bt /night) Avg. Occupancy Rate (%)
Avg. RevPar (Bt /night)
# of outlets
Same-store-sales growth
1,000
Bt per night
5,000
3,000 2,000 1,000 ‐
New outlets
16.0%
100%
14.0%
800
4,000
12.0%
80% 60%
2016F
2015F
2014
2013
2012
2011
2010
2009
2008
2007
8.0%
40%
400
20%
200
0%
10.0%
600
6.0% 4.0% 2.0%
0
0.0% 2010
2011
2012
2013F 2014F 2015F 2016F
Source: CENTEL, KT ZMICO Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 5
Figure 4: PE Band
Figure 5: PBV Band
(X) 8.0 +3 S.D.
7.0
+2 S.D.
5.0
+1 S.D.
4.0 3.0 2.0 1.0
