Hotels sector first to get hit in any instability situation; Find out how listed hotels performed in the second quarter of 2076/77

Fri, Feb 14, 2020 3:13 PM on Exclusive, Financial Analysis, Stock Market,
Hotels sec...

All the three hotels listed in Nepal Stock Exchange (NEPSE) have published their second quarter's financial highlights. Due to the global tension and recent epidemic of Corona Virus, all the companies seem to be in a bit of a slump.

The three hotels have been compared below based on major indicators:

Share Capital

Among the three hotels, Taragaon Regency has the highest capital at Rs 1.88 arba followed by Oriental Hotels at Rs 1.12 arba. Soaltee Hotel stands last at Rs 73.26 crore. The par value of TRH and OHL is Rs 100, while that of SHL is Rs 10.

Unlike banks and financial institutions and Insurance Companies, the Hotels sector doesn't have a minimum paid-up capital requirements.

Reserves and surplus

OHL has the highest reserves of Rs 1.10 arba among the three hotels. TRH despite the highest paid-up capital has the lowest reserves at Rs 71.37 crores only. Likewise, SHL has Rs 1.01 arba in its reserves fund.

Revenue from operation

The main operation for the hotels is selling rooms and its services to the customers. Thus among the three SHL has earned the most, showing higher turnover than others. It's revenue stands at Rs 82.11 crore till the second quarter of 2076/77. Similarly, TRH and OHL have reported revenue of Rs 59.89 crore and Rs 50.79 crore respectively.

The total revenue from operations of all three companies have fallen in comparison to the second quarter of last FY 2075/76.

Net profit

Despite having the highest revenue, SHL ranks second in terms of net profit. TRH earned the highest net profit of Rs 17.76 crore followed by SHL and OHL at Rs 11.59 crore and Rs 10.14 crore respectively.

Similar to revenue, the net profit of all three hotels has fallen in comparison to last FY's second quarter. OHL's profit has been by 24%, SHL by 23% and TRH by 16%.

Annualized Earnings per share (EPS)

The annualized EPS of TRH and OHL stand at Rs 18.83 and 17.98. In case of SHL, the annualized EPS stands at Rs 3.16 with par value per share at Rs 10.

Net worth per share

Similarly in this indicator too, the par value of SHL's share has to be considered. Its net worth per share is Rs 23.80 for a Rs 10 share. Likewise, the net worth per share of TRH and OHL are Rs 142.51 and Rs 197.66 respectively.

PE Ratio

There are always two ways of interpreting the P/E ratio. On one hand high P/E ratio indicates that the scrip is overvalued and is costing more than its earning capacity. On the other hand higher P/E ratio also indicates the goodwill and image of the company because of which the investors are willing to pay higher for per unit earning.

The PE ratio of SHL is highest at 128.95 times followed by OHL and TRH at 50.50 times and 28.78 times respectively.

Overall

Particulars (in '000)  Second Quarter of 2076/77 
 SHL   TRH   OHL 
Share Capital        732,675.37    1,886,654.00    1,128,090.44
Reserves and surplus    1,011,285.58        713,765.54    1,103,877.13
Revenue from operation        821,170.47        598,906.46        507,961.21
Net profit        115,911.56        177,646.97        101,406.57
Annualized earnings per share                     3.16                  18.83                  17.98
Net worth per share                  23.80                142.51                197.66
PE Ratio                128.95                  28.78                  50.50