Tuesday, November 06, 2007

Shang's net profit jumped in QE30/9/2007

Shangri-La Hotels (Malaysia) Bhd ('Shang') has just announced its results for QE30/9/2007. Its net profit jumped by 239% q-o-q or 212% y-o-y to RM27.8 million while turnover increased by 26.5% q-o-q or 32.8% y-o-y to RM114.1 million.

Shang attributed its improved performance for the current quarter vis-a-vis its previous year's corresponding quarter to "a strong improvement in the operating results of Shangri-La Hotel Kuala Lumpur, and the reopening of Rasa Sayang Resort in late September 2006 following its closure from December 2004 for a major redevelopment & repositioning programme". In addition, its current quarter has improved upon its last quarter's result due mainly to higher occupancy rate of some of its hotels, such as Shangri-La Hotel Kuala Lumpur (from 64% to 79%), Rasa Ria Resort, Sabah (from 73% to 92%) and also the Golden Sands Resort (from 59% to 78%).

Assuming that Shang can maintain this level of earning for a full year, its EPS would jump to 25.2 sen. Based on today's closing price of RM2.33, Shang would be trading at a PE of 9.2 times. That's fairly inexpensive for a strong brand like Shang.

Technically speaking, Shang's share price is still in a medium-term uptrend. It has retreated from its recent high of RM3.00 recorded in June 11. The uptrend line support can be seen at RM2.10, which is also a strong horizontal support.

Chart: Shang's weekly chart as at November 5 (courtesy of Quickcharts)

Based on strong performance, Shang is a BUY for the medium-term. Good entry level would be at the RM2.10-2.20 level, but this may not be possible for now.

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