Summary: Total revenue fell 5.4% YoY to S$13.8m and gross profit dipped 3.7% to S$12.1m. Net profit also fell 8.7% to S$4.0m. 1Q14 net profit constitutes 17.5% of our full-year estimate, which are in-line with expectations as we anticipate a backloaded year from the second Parc Sovereign hotel‟s contributions in 2H14. Due to competitive conditions in the hospitality sector, we continue to see pressure on the group‟s occupancy and room rates; average occupancy rate (AOR) decreased from 89.6% in 1Q13 to 86.0% in 1Q14 and revenue per available room (RevPar) also decreased from S$91.4 in 1Q13 to S$91.0 in 1Q14. Our fair value estimate is unchanged at S$0.33. Given that the current share price is at our fair value, we downgrade our rating to a HOLD on valuation grounds.

Source: OCBC Research - 2 May 2014