SINGAPORE (Mar 11): Banyan Tree on Feb 27 announced that its 4Q18 earnings have increased by 44% y-o-y to $5.63 million, while revenue increased by 4% y-o-y to $92.8 million.

Other income surged 171% to $24.3 million and share of results of associates saw a significant increase to $12.3 million compared to $0.86 million last year.

For FY18, earnings were 4% up from the previous year at $13.5 million, with revenue also increasing by 4% to $329.0 million.

The group has proposed a final dividend of 1.05 cent per share.

Following the results announcement, Phillip Capital is keeping its “accumulate” recommendation on Banyan Tree with a higher target price of 76 cents from 73 cents previously.

Two of the group’s three components of the fee-based segment – hotel/fund/club management and spa/gallery operations – saw positive growth in 4Q18 after recorded a decline of almost 20% each y-o-y the same period last year.

The group’s operating profit the fee-based segment in FY18 experienced an 86% y-o-y increase, which is the result of the group’s efforts in transition to an increasingly asset-light model is building momentum.

Meanwhile, the group’s revenue from its property sales segment recorded a 61% y-o-y increase for 4Q18 and 50% increase in FY18. The 4Q18 increase was mainly due to the higher handover of units at Cassia Phuket, Laguna Park town homes/villas and Laguna Village residences, as well as handover of units for Banyan Tree Grand Residences.

However, revenue from the group’s hotel investments segment dropped 13% y-o-y in 4Q18, mainly due to ongoing renovations at Banyan Tree Phuket and underperformance from Angsana Laguna Phuket due to absence of major events, as well as the deconsolidation effect following the disposal of entire Seychelles assets portfolio in Nov 2018.

RevPAR for all hotels under the group was also down 17% y-o-y on both lower occupancy and lower average room rate.

In a Friday report, analyst Tara Wong says, “Despite the continued negative impact from the July 2018 Phuket incident which compressed forward bookings in Thailand through 1Q19, long-term growth catalysts remain intact as the group transitions to an increasingly asset-light model.”

In 2018, the group secured a record of 28 management contracts. And the analyst believes that the securing of such contracts, especially with strong partners such as Accor and Vanke, will be the main driver for its fee-based income.

As at 11.25am, shares in Banyan Tree are trading at 57 cents or 19.6 times FY19 earnings with a dividend yield of 1.7%.