Hotels group has further room for earnings growth

PUBLISHED : Sunday, 17 March, 1996, 12:00am
UPDATED : Sunday, 17 March, 1996, 12:00am

HONGKONG & Shanghai Hotels operates The Peninsula Hotel, Kowloon Hotel, and The Peninsula Hotels in the United States.

Brokerage Standard Chartered Securities has rated the company a long-term buy, saying it has revised its earnings outlook upward.

Hongkong & Shanghai's net profit in 1995 was $652 million, up 27 per cent from the $512 million before an extraordinary item in 1994.

Operating profit was up by 51 per cent, much higher than expected, due mainly to stronger growth in food and beverage operations, which grew 58 per cent.

Room revenue rose 47 per cent, due largely to the 72 per cent room-occupancy rate at The Peninsula.

The company's Peak Tower, expected to open in mid-1996, already has 92 per cent of its space leased out. This and its new Landmark complex in Vietnam will help its property income grow by 18 per cent in 1996 and 14 per cent in 1997.

Hongkong & Shanghai's net profit is likely to grow at 4.7 per cent for 1996, and as a consequence the stock is trading at an attractive 18 per cent discount to its net asset value.