GPH made $6.4 million net profit in 1Q.
During its IPO in April, (ie after 1Q), it bought out the hotel assets of Fragrance, its parent, and assumed $446 million in borrowings.
In 2Q, we will see the effects of the interest cost. Assuming 2% on $446 million, the interest will be $9 million a year, or $2.3 million a quarter.
The 2Q bottomline will likely be lower than the 1Q. Ditto for the rest of FY12. Just my 2 cents worth
On the whole, the market has been pretty lukewarm towards Global Premium Hotels. I have not touched it either. It's big problem is the amount of bank borrowings = the interest cost that sucks a lot of the life out of its operating profits.Â
Just following up on this stock. 1H 2013 earnings fell 7.3% to $9.2 million.
Finance costs remain high at $3.9 million!
That's heck of a lot, compared to the bottomline.
Not surprising that share price is languishing at 24.5 cents ... supported only by Koh Wee Meng's continued buying because he has deep pockets and he is chairman of Global Premium Hotels. :S
