Positive on China Travel’s 2015 annual result-core profit beat by 4%
Total core net profit (excluding non-recurring items such as power plant etc)grew by 6% yoy to HKD641million from HKD605million in 2014, beating ourestimate of HKD617million by 4%. This is primarily due to tourist attractionsegment profit growth.
Tourist attraction profit up 102% yoy, the main earnings contributor.
We believe this is mainly due to: 1) Shapotou, the famous desert tourist site inNingxia Province, which contributed full-year earnings vs. last year after only afew months and 2) reduced loss from Zhuhai Ocean Spring Resort.
Hotel saw recovery in 2H15
The 48% yoy hotel profit decline was well expected by the market as thecompany has 4 hotels in Hong Kong, 1 in Macau and 2 in mainland China. Theprofit decrease is mainly due to the challenging tourism market in HK/Macau.However, 2H15 hotel segment profit is down by only 39% yoy vs. a 56% yoydecline in 1H15, showing a recovering trend.
Analyst briefing on 31 March
Management will host analyst briefing at 15/F, CTS House, 78-83 ConnaughtRoad Central, Hong Kong at 10AM. Key questions to focus on: 1) significantprofit jump from tourist attraction; 2) outlook for the hotel segment in 2016; 3)any guidance on potential acquisition of new tourist sites in 2016.