Guocoleisure’s 1QFY16 reported net profit up 89% year on year (16 Oct 15)
Guocoleisure (“GLL”) reported its 1QFY16 results yesterday evening. 1QFY16 revenue and net profit registered -2% and +89% year on year (“y/y”).
Excluding the one-off compensation amounting to approximately US$13.1m from the cessation of management of 19 regional Thistle Hotels owned by a third party, 1QFY16 net profit should be around US$18.3m, still up about 10% y/y.
To put its 1QFY16 net profit (US$18.3m) in perspective, this formed 38% of FY15 net profit and CIMB’s estimates.
Spate of insider buying buoys confidence
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FY15 dividend hike – reflects management confidence
From FY2011 – FY2014, GLL has been distributing S$0.02 / share for the past four financial years. In FY15, GLL raised its dividend by 10% to S$0.022 which might be an indication of management’s confidence in better or similar performance ahead.
Despite weak oil price, FY16F may not be that poor
According to management, they believe that the oil price is unlikely to recover to 2014 level, thus the contribution from their Base Straits Oil Royalty is likely to be affected. However, FY16F results may not be poorer than FY15 due primarily to the following factors.
Firstly, 1HFY15 had no significant interest savings as GLL only refinanced its GBP138m 10.75% mortgage debenture to below 4% in Dec 2014. The interest savings will have a full year impact to FY16F.
Secondly, according to Lim & Tan’s Aug 2015 research report, although GLL will continue its refurbishment program for its hotels in FY16F, management is targeting to refurbish 25,000 room nights in FY16F vis-à-vis the average 50,000 room nights in the past two years.
Chart analysis
GLL slumped to a low of $0.735 on 24 Aug 2015 which was more than a two year low. It subsequently rebounded and closed at $0.880 on 16 Oct 2015. OBV is bullish as it sits near all-time highs. Other indicators such as RSI and MACD are strengthening.Near term supports: $0.880 / 0.845 – 0.850 / 0.835
Near term resistances: $0.890 / 0.900 - 0.905 / 0.925
Conclusion
This write-up is meant to summarise GLL’s recent developments. I should have some updated analysts’ reports next week and will send to both my clients and readers who are on my reader’s mailing list.
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