SINGAPORE (Nov 14): RHB Research is maintaining its “buy” call on Amara Holdings with an 88-cent target price after the hotel and property group’s 3Q18 results came in line with the research house’s expectations with a net profit of $2.5 million.
In a Wednesday report, analyst Leng Seng Choon says he remains bullish on Amara following its latest set of results, which reflected strong y-o-y revenue growth in the hotel space due to higher topline in the hotel investment & management segment across geographies.
The analyst also sees further improvements from the newly-opened Amara Signature Shanghai’s margins, as Amara targets for the hotel to become net profit positive in 2019.
“Within the first few months of operations, the hotel is cash flow positive. Management is now working on refining the client market segments, which should help raise margins,” says Leng.
Going forward, he believes the group will enjoy an even better earnings performance next quarter, as 4Q net profit is seasonally stronger due to investment property revaluation gains.
“When Amara releases its full-year 2018 results in Feb 2019, its profit will include the revaluation gains for investment properties such as retail and office spaces. These gains will include those for the company’s Shanghai commercial properties: both office and retail. This could be a positive catalyst for 2018 full-year earnings,” he adds.
As at 3.46pm, shares in Amara are trading flat at 42 cents or 0.63 times FY18F book value.