Despite posting a lower-than-expected net income in the third quarter, Formosa International Hotels Corp (FIHC, 晶華國際酒店集團) may see earnings improve this quarter on the back of higher occupancy rates, brokerages said yesterday.
Formosa International reported net profit of NT$216.42 million (US$7.34 million) in the July-to-September period, or NT$2.04 per share, compared with the NT$259.61 million, or NT$2.44 per share, recorded a year earlier, the company said in a stock exchange filing on Thursday.
Analysts said the third-quarter results were “disappointing” and attributed the weakness mainly to the negative effects of the hotel operator’s refurbishment program in August.
The company’s renovation work on the Formosa Regent Taipei (台北晶華酒店) dragged down the hotel’s occupancy rate and lowered its third-quarter earnings to 20 percent less than the market consensus, UBS Securities said in a note to clients yesterday.
Formosa Regent Taipei, the nation’s biggest listed hotel operator, accounts for more than 50 percent of FIHC’s consolidated sales.
However, the brokerage has an upbeat view of the company for this quarter.
“As the renovation was completed in September, we believe Regent Taipei’s occupancy rate and room rate should show strong quarter-on-quarter improvements in the fourth quarter,” UBS Securities analyst Ally Chen (陳玟瑾) said in the note.
Yuanta Securities Co (元大證券) shared UBS’ thoughts and expected a rebound in the number of Japanese visitors to benefit the company’s business this quarter.
Data compiled by the Tourism Bureau showed the number of Japanese visitors increased 0.36 percent year-on-year in September.
Yuanta said it holds a positive long-term view on FIHC given that several of its new hotels are to begin operating next year, which will drive future growth momentum, as will the licensing fee income of the Regent brand from a project in Montenegro in the second quarter next year.
In addition, “We believe the investment in refurbishment will benefit future business,” Yuanta analyst Yeh Chia-wen (葉嘉雯) said yesterday in a report.
FOUR MORE HOTELS
Formosa International planned to open two new hotels in the Middle East and another two in Taiwan this year, but the company has decided to delay the openings of Regent Abu Dhabi and Regent Doha to the first quarter of next year, from this quarter, due to slow progress on construction.
The opening of another two new hotels in Hualian and Yilan under its Just Sleep (捷絲旅) brand will also be delayed to the first half of next year because of a wait on government licenses, the company said.
In the first nine months of this year, the company’s net profit totaled NT$781.68 million, or NT$7.35 per share, compared with the NT$819.94 million, or NT$7.71 per share a year earlier, company statistics showed.