KGI Securities has reiterated its ' buy' call and 41.5 cents target price on luxury resorts operator Banyan Tree Holdings B58 0.00% , on the premise that tourism recovery is ongoing. 

 

For its 1HFY2023 ended June, the company reported core operating profit of $18.7 million, up from $11.1 million recorded in the year-earlier 1HFY2022. Revenue in the same period was up 21% y-o-y to $143.7 million, led by higher RevPar of 64%.

 

In a recent development, Thailand, in a bid to draw more visitors to help offset weakness in its export sectors, will temporarily waive tourist visa requirements for visitors from China and Kazakhstan from Sept 25 to Feb 29 next year. 

KGI notes that the business sector has welcomed the government&rsquo s new policy, and airlines are preparing to increase flights and add more capacity to accommodate the expected increase in tourists. 

 

" The tourism industry is optimistic that the visa-free scheme will be a success and boost tourism spending in Thailand. This would also benefit businesses such as Banyan Tree, which has multiple properties in the country," states KGI.

 

Separately, Banyan Tree, Ennismore, and Dubai Holding have partnered to open a new Banyan Tree hotel in Dubai, replacing the existing Caesars Palace Dubai on Bluewaters Island. This new hotel, with 179 rooms, will be run jointly by Banyan Tree and Ennismore and will open in November. 

 

According to KGI, this is the first of many hotel and brand development projects that Accor (a strategic partner of Banyan Tree) and Dubai Holding plan to collaborate on, to further develop and grow the hospitality sector in Dubai.

 

Company chairman Ho Kwon Ping has indicated that while China' s mass market is taking longer to recover, the impact is relatively small on his company given its premium positioning.

 

" He is also confident that the Chinese real estate market will not collapse, as the banking system is strong. Additionally, he mentioned that Banyan Tree&rsquo s exposure to the Chinese real estate bubble is not large due to the sale of a few hotels in China before the bubble," adds KGI.

 

RESORT operator Banyan Tree Group : B58 -1.1% on Thursday (Aug 10) reported a net profit of S$981,000 for the six months ended Jun 30, 2023, up 91 per cent from the S$514,000 in the corresponding period last year.

 

H1 revenue rose 21 per cent to S$143.7 million &ndash from S$118.6 million in the corresponding period a year ago &ndash fuelled by &ldquo better&rdquo performance in its hotel investments and fee-based segments, said the group in a bourse filing. 

 

The hotel investments segment grew 57 per cent year on year to S$95.3 million, from S$60.8 million a year ago, as revenue from hotels in Thailand almost doubled after the country lifted its pandemic travel restrictions. 

 

Occupancy in Thailand surged to 71 per cent in the half-year, from 46 per cent in H1 FY2022. Revenue per available room in the country also increased by 2.2 times in the same period. 

 

Over in the fee-based segment, revenue grew 30 per cent year on year to S$27.7 million, from S$21.3 million a year ago. This was primarily due to higher management fees from the group&rsquo s managed hotels in Asia, which have gradually opened up to international tourism since the second quarter of 2022, said the group. 

 

Meanwhile, revenue from Banyan Tree&rsquo s property sales segment plunged by 43 per cent to S$20.8 million in H1, from S$36.6 million the previous year, which included the recognition of the remaining units of Angsana Beachfront Residences in Indonesia at S$18.8 million. 

 

Earnings per share stood at 0.11 cents, up from 0.06 cents in the year-ago period. 

 

&ldquo (Our) hotels have shown a good recovery from the impact of the Covid-19 pandemic, surpassing all pre-covid 2019 metrics across various regional markets,&rdquo said the group. 

 

For the rest of 2023, Banyan Tree plans to open three new properties in Zhuhai, China Yogyakarta, Indonesia and Koh Samui, Thailand.