Uni-Asia Group, which has core interests in ships and property, has a hotel operating segment that is increasingly gaining traction.

Its hotel income has been rising, and so has the number of rooms under management:

(USD ‘m)

1Q 2017

1Q 2018

1Q2019

End-2020F

Hotel income

10.3

12.8

18.6

No. of hotels operated

10

11

16

 21

No of rooms

1,617

1,851

2,667

3,401


Hotel Vista Premio Yokohama Minato MiraiHotel Vista Premio Yokohama Minato-Mirai. No. of rooms: 232Located all over Japan, the hotels are generally considered "business hotels" with about 53% of guests being corporate clients from the likes of Nissan, Sony and Hitachi, according to Uni-Asia.

Branded as Vista hotels, about 75% of the guests are Japanese while foreigners make up the rest.


The number of hotels under management will expand further: 

brief519At 1Q19 results briefing: Michio Tanamoto, executive chairman | Lim Kai Ching, CFO (top, right).
Photo: Colin Lum
♦ In Dec 2019, a new hotel will open in Fukuoka city. No. of rooms: 204.

♦ In 2020, 4 new hotels will open -- two in Osaka, one near Tokyo and one in Shikoku Island. 

Total number of new rooms: 682.

That would bump up the total number operated by Uni-Asia to 3,401 rooms (after subtracting 152 rooms from a hotel whose operating contract ended in March 2019).

This will bring about economies of scale and, hopefully, turn the hotel segment into a sustainably profitable one -- although the industry as always is a competitive one.

Uni-Asia management pointed to major events that are positive for the hospitality industry this year and next:

Unprecedented 10-day holiday (April 27 to May 6) to mark imperial succession in Japan and the Golden Week. 

♦ The Rugby World Cup from 20 Sept to 2 Nov 2019.

Olympic Games from 24 Jul 2020 to 9 Aug 2020.

 

Stock price 

73.5 c*

52-week range

69 – 93 c

Market cap

S$58 m

PE (ttm)

20x

Dividend yield 

5.7%

Year-to-date 
return

-16%

Shares outstanding

78.6 m

*Post-bonus issue of 1 for 2.

Don't expect the hotel segment's profitability to sparkle as yet.

There is a new accounting rule, the IFRS 16, which effectively "frontloads" expenses arising from Uni-Asia operating hotels leased from third party owners.

The impact will be particularly felt this year and less so next year on both the income statement and balance sheet.

You get a glimpse of that in the results for 1Q19, typically the slowest quarter: The hotel segment's loss after tax was US$1.0 million.

It would have been about US$100,000 only under the previous accounting rule.

Group profit in 1Q2019 would have been US$1.5 million more if not for the adoption of IFRS 16.”

limkaiching agm5.18CFO Lim Kai Ching. File photo


At the group level, 1Q19 profit attributable to shareholders would have been US$1.5 million higher if not for the adoption of IFRS 16: ie, US$5 million instead of US$3.5 million.

Y-o-y, the increase would have been 57%, instead of 9%, respectively.

The application of IFRS 16 is explained in the 1Q19 results presentation materials here. 

 


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