Shangri-La (Asia) management is confident that RevPAR's growth will drive EBITDA profit margins and promised to increase the Group's RMB loan exposure from 25% in the second half of 2023 to 50% in 2024.
The Zhitong Finance App learned that Daiwa released a research report stating that it reaffirmed the Shangri-La (Asia) (00069) “buy” rating. Shangri-La's profit forecast for 2024 to 2025 was lowered by 19% to 20%. The target price was lowered from HK$9 to HK$8.5, mainly due to group costs, which were still higher than expected financing costs. The company's effective share of profit before interest, tax, depreciation and amortization (EBITDA) in the second half of last year was higher than market expectations, but the after-tax operating profit (PATMI) after deducting minority rights during the same period fell short of market expectations, mainly due to higher financing costs and management costs.
According to the report, during the Lunar New Year period, the Group's main market revenue per available room (RevPAR) reached a record high. Management is confident of further recovery this year, and the target is that RevPA will increase by more than 10% year over year. The bank indicates that although the contribution of leisure travel is still strong, it is expected that the further recovery of business travel and cross-border travel will be an additional driving force for the Group's RevPAR. As for profit margins, the Group's management is confident that RevPAR's growth will drive EBITDA profit margins, and promised to increase the Group's RMB loan exposure from 25% in the second half of 2023 to 50% in 2024. Mainly because the cost of financing in RMB is 250 basis points lower than the US dollar.