Hotel Royal

[redcorolla95]

To be able to appreciate the real wealth accumulation process in the business, we should not just pay too much attention to the yearly P&L numbers or ROE.

You're right. While I did say that we should look at a return over a long period, I left out that my calculation for the ROE of about 15% was over the last 5 years - because that was from the latest annual report. That points to a fairly competent management.

People who're looking seriously at this counter should consider 10 year horizon to assess their capability of building wealth.

but asset play, the value might not be realized for a very long time. maybe one fine day, it will be realized, but no one knows when. could be 5 years, 10 years or even longer, or 1 year, 6 months or even shorter.

And yes, asset plays may take a long time to be realized. But at the same time, even if there is a 33% discount the whole time, you will double your money if the assets keep growing at 15%.

The much harder question to answer is whether management can keep getting 15% out of their assets.

[freedom]

for matured assets like hotel or other commercial property, it is difficult to keep getting 15%. of course they can keep increasing the valuation of the properties, but, it will get harder and harder to realize the value. and long term, property yields very low...

[Nick]

Thank you for all of your response.

HR should enjoy a bumper year (barring unforeseen events). Its results in 2010 was partly affected by losses in the Malaysian rental and hotel assets. With the refurbishment completed in Sept 2010, they should at least break even or even turn in some profits. The residential development project should add in small income stream in the coming year.

I noticed Pan Pacific generated core ROE of 5.8% while Mandarin Oriental generated core ROE of 4.9% despite both having similar gearing level as HR. HR core ROE level averages at 2.5-3% annually.

HR potential for huge capital gains cannot be discounted. The divestment of Dapenso building in 2007 gave rise to massive profits. I recall St****** received a huge offer for its hotel assets prior the crisis. I do agree that Hotel stocks are good asset plays.

[dydx]

Hotel Royal is buying its first hotel - White Orchid Hotel - in Bangkok/Thailand for THB520.0m (approx. $20.8m), vs. an assessed fair MV of THB565.0m.....
http://info.sgx.com/webcoranncatth.nsf/V...F001DB507/$file/HRL_Announcement_Proposed_Acquisition_30June11.pdf?openelement

White Orchid Hotel is a 315-room tourist-class hotel located in a prime commercial district in the heart of Chinatown of Bangkok. The hotel has 2 F&B outlets, conference room facilities and 110 car parking bays. Based on the purchase price of approx. $20.8m, cost per room is only approx. $66k! More info on the hotel...
http://www.whiteorchidhotelbkk.com/index.html

As the proposed purchase is at a price below its fair MV, upon completion Hotel Royal stands to book a gain from bargin purchase of approx. $1.8m.

[dydx]

Hotel Royal has on 6Oct11 completed the acquisition of the White Orchid Hotel in Bangkok.....
http://info.sgx.com/webcoranncatth.nsf/V...10014994E/$file/HRL_CmpletnofProAcqofWhiteOrchidHotelBangkok_06Oct11.pdf?openelement

With this latest acquisition, Hotel Royal's core hotel division now owns and operates a total of 5 hotels - 2 in Singapore, and 1 each in Kuala Lumpur, Penang, and Bangkok. Apart from that, Hotel Royal also owns a large portfolio of investment properties and quoted securities. The latest operating results and more details in the Q2/1H (ended 30Jun11) results announcement.....
http://info.sgx.com/webcoranncatth.nsf/V...90023FC9C/$file/HRL_2Q2011FS.pdf?openelement

Based on its 84.0m issued shares and the last done share price of $2.12, Hotel Royal now has a market cap of only $178.0m.

[dydx]

FY11 (ended 31Dec11) results out yesterday (24Feb12) and makes excellent reading.....
http://info.sgx.com/webcoranncatth.nsf/V...D0018FA99/$file/HRL_FY2011_Results_Announcement_Final_1.pdf?openelement
The high-quality announcement shows Hotel Royal's management being proper and serious in meeting their disclosure responsibilities as a public-listed company. I find the REVIEW OF GROUP PERFORMANCE in Section 8 (p18/19) giving a 2-page summary on what happened in the group business in Q4 and the entire FY11 most succinct and particularly useful.

In Q4, if not for (a) an estimated $0.9m adjustment of rental income for prior periods in 2011, arising from delay in completion of renovation works in commercial property Grand Complex in New Zealand, and (b) a $2.46m (non-cash) provision on impairment loss on the said investment property, Hotel Royal would have posted a decent PBT of approx. $3.3m, instead of the small $14k pretax loss recorded.

An unchanged $0.05/share Final dividend declared.

Based on the latest 84.0m outstanding issued shares and the last done share price (as at 24Feb12) of $2.31, Hotel Royal now has a market cap. of $194.0m. Against the 5 hotels - 2 in Singapore, and 1 each in Kuala Lumpur, Penang, and Bangkok - owned and operated by the company, and the additional investment properties and quoted securities portfolio held by the company/group, as well as the huge redevelopment potential of the freehold land at Newton Rd (where the first Hotel Royal is located), perhaps Mr Market is ultra-conservative towards this counter!

[port]

i was at newton hawker centre yesterday when an aged couple from overseas asked me for direction to hotel royal. they came from novena mrt.

a check shows hotel royal is 8mins walk from novena mrt.

[dydx]

In a rare move, Chairman Lee Keng Thon on 14Aug12 made an open-market purchase of 35 lots at $2.49/share.....
http://info.sgx.com/webcorannc.nsf/Annou...endocument
Apparently, Lee's purchase has triggered others to follow suit, and Hotel Royal's daily transaction volume has since increased and its share price has also crossed the $2.50 mark, and closed at $2.52 today (22Aug12). This is a good sign!

[godjira1]

slowly moving up. lets see if something is afoot though trading volumes are still very light. this is one of those dead money stocks but has got plenty behind it imo. problem almost is that u need the hotel biz to do badly to force an unlocking of the asset values?

<vested>

[dydx]

Today (23Aug12) Hotel Royal added another $0.08 to close at $2.60. I am also pleasantly surprised to note that actually Hotel Royal had started to out-perform STI towards end-Jan12.....
http://finance.yahoo.com/q/bc?t=1y&s=H12...5Esti&ql=1