1Q15 revenue rose 7.2% YoY to S$14.8m and gross profit increased 8.5% to S$13.2m. Net profit for the quarter, however, fell 18.6% to S$3.2m due to higher administrative and finance costs which increased 17.5% and 15.1%, respectively. We judge these results to be broadly in line with our expectations but note that, notwithstanding a steady gross profit margin, the group continues to be pressured by rising staff costs and growing competition in the hospitality sector.

The group’s average occupancy rate decreased from 86.0% in 1Q14 to 79.5% in 1Q15, and revenue per available room similarly decreased from S$91.0 in 1Q14 to S$82.4 in 1Q15. Maintain HOLD. Our fair value estimate remains unchanged at S$0.33.

Source: OCBC Research - 4 May 2015