Which listed Hotel leads the race in the first quarter of FY 2076/77 based on comparison of major indicators?

Thu, Nov 21, 2019 1:00 PM on Exclusive, Financial Analysis,

Currently there are only three Hotels that have been listed on NEPSE and they together make up the Hotels sub-index on NEPSE. They are Soaltee Hotel Limited, Taragaon Regency Hotel (Hyatt Hotel) and Oriental Hotels Limited (Radisson Hotel).

Based on the first quarter reports published by these hotels; a comparative analysis has been prepared to give a clear picture to the investor about the performance of listed hotels till the first quarter end of FY 76/77. Some key indicators have been compared that will give a clear picture regarding the performance of hotels.

Share Capital and Reserves & Surplus

Since there is no minimum paid-up capital requirement for listed hotels, high disparity can be seen in the share capital of the Hotels. Taragaon Regency Hotel (TRH) has the highest share capital among the three which is standing at Rs.1.88 Arba. Oriental Hotels Limited (OHL) posted share capital of Rs.1.07 Arba while Soaltee Hotel’s (SHL) share capital is the lowest at Rs.73.26 Crore.

Although TRH posted the highest share capital, its reserves and surplus is at lowest highest among the three at Rs.55.02 Crore. Oriental Hotels Limited (OHL) has the highest reserves and surplus standing at Rs.1.20 Arba. SHL posted reserves and surplus of Rs.92.49 Crore.

Revenue from Operation

As per the first quarter reports, Soaltee Hotel Limited (SHL) generated highest revenue worth Rs.31.64 Crore from operations while Taragaon Regency Hotel (TRH) generated Rs.20.47 Crore. Oriental Hotel (OHL) generated Rs.19.28 Crore as revenue from operation.

Net Profit

Looking at the net profit posted by each of these hotels, Soaltee Hotel Limited (SHL) has posted a net profit of Rs.2.95 Crore which is the highest among three. Taragaon Regency Hotel (TRH) was able to post a net profit of Rs.1.46 Crore. Oriental Hotel Limited (OHL) posted a net profit of Rs.1.31 Crore which is lowest in the industry. The profit of TRH is the profit before bonus and tax deduction so, this factor might change the position of net profit and EPS of hotels.

Annualized Earnings per Share

The par value of SHL shares is Rs.10 while that of the other two is Rs.100. If we assume Soaltee Hotel Limited (SHL) share prices to be at par value of Rs.100, the annualized EPS of SHL stands at Rs.16 which is the highest among the three. Oriental Hotel Limited (OHL) posted an EPS of Rs.4.88 and Taragaon Regency Hotel (TRH) posted an EPS of Rs.3.17 which is the lowest in the industry.

*The EPS has been annualized based on the data from the first quarter reports

Net Worth per Share

As mentioned earlier, SHL shares’ par value is Rs.10 due to which there is disparity among the posted values. If we are to equate Soaltee Hotel Limited (SHL) shares’ par value with that of other hotels, its net worth per share will be at Rs.226.20 which is the highest in the industry. Taragaon Regency Hotel (TRH) posted net worth per share of Rs.133.84 which is the lowest in the industry while Oriental Hotel Limited (OHL) posted net worth per share of Rs.211.91.

P/E 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. Soaltee Hotel Limited (SHL) posted the highest P/E ratio of 129.38 times while Taragaon Regency Hotel (TRH) posted the lowest P/E ratio of 91.03 times. Oriental Hotel Limited (OHL) posted a P/E ratio of 92.21 times.

*The PE Ratio has been calculated on the basis of annualized EPS and LTP on 30th Ashwin, 2076.