Global Premium Hotels' (GPH) 2Q16 results were within expectations. 2Q16 revenue dipped 2.7% YoY to S$14.6m, or 25.1% of our FY16 forecast. This was mainly due to lower hotel room revenue recognised from most of the hotels, including three hotels closed either fully or floor by floor to facilitate asset enhancement works.

The decrease was partially offset by additional contribution from hotels which were completed with asset enhancement works in FY15. The group’s average occupancy rate decreased 5.0 ppt from 2Q15 to 77.5% in 2Q16, which contributed to a 2.1% YoY decline in RevPAR to $82.9 this quarter.

Cost of sales decreased 5.3% YoY due to savings in utilities and cable services. Net profit dropped 13.5% YoY to S$2.7m, or 20.2% of our full-year forecast, on the back of a 7.2% YoY increase in administrative expenses. Maintain HOLD with fair value of 31 S cents.

Source: OCBC Research - 4 Aug 2016