Guocoleisure net profit soars by 89.2% to US$31.4m

Propelled by stellar hotel operations.

Aside from being rejuvenated by its strong hotel operations, the hospitality group also hit the sweet spot on its gaming segment, reducing its losses in 1Q16.

According to a report by CIMB, excluding a one-off compensation of US13.1m for the stoppage of 19 managed hotels, the group’s core net profit rose by 24.6% yoy.

However, CIMB says the strong hotel performance was partly offset by lower oil and gas royalty income coming from Bass Strait.

Meanwhile, CIMB says Guocoleisure’s hotel development has also been bearing fruit.

“1QFY16 hotel core operating profit rose 14% yoy to US$23.5m (1QFY15: US$20.6m). The strong 1QFY16 RevPar growth of 11% was particularly encouraging, in view of the generally slower UK hospitality sector as the weaker Euro turned the UK into a more expensive destination for Eurozone travellers,” CIMB said.

Cost management under the group’s new VCGM model also drove hotel operating margin to expand by 2.7%. The new model focuses on operating efficiency at individual hotel level.

Meanwhile, non-core businesses are threatening to spoil the group’s earnings.

“In 1QFY16, oil & gas royalty income from Bass Strait fell 50% yoy to US$6.5m (1QFY15: US$13m) dueto the significant decline in global oil prices and weaker A$ against the US$. The Clermont Club, GLL’s only casino, posted reduced operating loss of US$0.5m in 1QFY16 (1QFY15: US$3.8m loss),” CIMB said.

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