CENTEL sends a signal of recovery. Fears of rising costs weigh on food margins

business direction “Central Plaza Hotel” after the first quarter hit a shallow loss of only 44 million baht due to the recovery of the hotel business both in and abroad While the restaurant business is not less than the sales of each branch has increased after the lockdown. Higher costs must be monitored as well as inflation may depress margins. While overall, the financial position remains strong.

Recently, Central Plaza Hotel Public Company Limited (CENTEL) revealed the results of the 1st quarter of 2012 with continuous growth resulting in total revenue of 3.88 billion baht, an increase of 1.1 billion baht or 40% from the quarter. For the first time last year, the revenue was 2.77 billion baht, with increased revenue from both food and hotel businesses. which received positive factors from opening the country and relaxing measures to control the spread of Covid-19 Make profit before depreciation Amortization, interest expense and income tax (EBITDA) totaled 951 million baht, higher than the first quarter of 64 at 486 million baht, an increase of 465 million baht or 96%.

At the same time, it is the profit margin before depreciation. The amortization, interest expense and income tax expense to total income (% EBITDA) was 24%, an increase of 18% year-on-year, resulting in earnings before interest expenses. and income tax (EBIT) of 184 million baht, an improvement of 157% from a loss of 324 million baht in the first quarter of 2021, resulting in a net loss of 44 million baht, a decrease of 91%.

by hotel business Overseas hotel performance continues to recover throughout the Maldives. which is during the tourist season and Dubai hotels The occupancy rate is quite high from the World Expo from October 1, 2021 to March 31, 2022, while Thailand benefits from easing measures. in continuous travel into the country Overall, average hotel revenue per room (RevPar) increased 197% to THB 1,957, with average occupancy rate (OCC) increasing from 14% to 35% in 1Q12 and at average room rate ( ARR) increased 16% YoY to 5,660 baht, resulting in hotel business total revenue of 1.24 billion baht, an increase of 748 million baht or 149% from the same period last year.

while Food business Revenue growth is due to a number of positive factors, including the government’s ongoing easing of lockdown measures; Concerns about COVID-19 infection decreased due to the increase in the vaccination rate of the population and the impact of the omicron outbreak is not as severe as the previous delta species. In addition, the company has continually organized promotional activities. In order to stimulate sales in both channels of eating at the shop takeout and delivery including government measures for good shopping which are all factors that promote sales Consequently, same-store sales (%SSS) growth rate increased by 10% year-on-year, representing an increase of 9% for the four main brands and 15% for other brands, and a growth in total sales of all stores (%TSS). ) 15% YoY, resulting in CENTEL’s total food business revenue of 2.63 billion baht, an increase of 360 million baht or 16% year-on-year growth.

Many new projects support

in addition In 2022, the Company will recognize its full-year performance for the first time from 2 new hotels: 1) Centara Reserve Hotel Samui 184 rooms, the first luxury class in the group; 2) Centara Mirage Hotel B. Sh Resort Dubai, 607 rooms, is a joint venture. The company owns 40 percent and the company will recognize revenue from investments in new brands in Shinkanzen Sushi and Senma Sushi restaurants. Currently operating 38 stores, the company acquired 51% on May 3, 2022.

strong financial condition

However, although the company expects that The Covid-19 outbreak seems to be promising. But the company continues to monitor the situation closely to cope with the uncertain situations that may arise in order to ensure that There is proper management of financial matters. and have sufficient cash flow in all situations It maintains a strong financial position. As of March 31, 2022, the liquidity ratio improved from the end of 2021 at 0.7 times and the interest-bearing debt ratio remained strong. (excluding lease liabilities) to shareholders’ equity 0.9 times However, the Company has conditions with financial institutions regarding the maintenance of interest-bearing debt ratios. (excluding lease liabilities) to shareholders’ equity at 2.0 times

At the same time, although there are still factors that may affect the hotel business, such as the conflict between Russia and Ukraine. Policy and measures to control COVID-19 different in each country Uncertainty in the recovery of the global economy and pressure on raw material prices and transportation costs that affect the profitability of the food business. As a result, the number of tourists increased in accordance with the easing of measures respectively. In addition, the company has a plan to negotiate with the seller on an ongoing basis. Find additional sources of raw materials as well as adjusting product prices to reflect the rising condition of raw material prices The company has tried to balance the value of the customers and the profits of the company properly.

Confidence in both core businesses to grow

make In 2022, the Company estimates the average occupancy rate of the hotel business for the year. (Including hotels in Dubai) in the range of 40-50% and the average income per room (RevPar) is at 1,700-1,900 baht and the food business. growth rate from the same branch (Same-Store-Sales: SSS) 10% to 15% YoY and total sales growth rate in all stores (Total-System-Sales: TSS) ranges from 20% to 25% year-over-year. for the growth of the number of branches The company expects a net increase of 180-200 branches.

The occupancy numbers are impressive.

Based on that data, analysts found occupancy accelerated to an impressive 50% in April 2022 (from an average of 29% in the first quarter of 20) on the back of better hotel performance in the region. every location Especially Hua Hin and Pattaya, where occupancy is above 60%, and the Maldives, where occupancy remains high at 70%, although management expects total occupancy to drop slightly in May 2022 due to seasonal factors in Maldives hotels.

Maintain investment budget 3-4 billion baht

what is interesting is CENTEL maintains its annual capital expenditure (CAPEX) of 3-4 billion baht for the next three years, while it plans to open the Centara grand Hotel Osaka (515 rooms) in 2023F, the hotel it’s a Owner of one in Chiang Mai (130 rooms) in 2025 and two hotels in the Maldives from 2025-26. meanwhile The company’s balance sheet remains strong, with a D/E ratio of 0.9x in the first quarter of 20.

while sales growth from the same store Same-store-sales growth (SSSG) posted an impressive 20% in April. and is expected to stay at 30% in May 2022, partly due to the effect of a low base (Figure 2). Sales momentum is expected to continue to be positive in 2Q22 due to the COVID-19 situation. better

Fears of rising inflation pressure on gross profit

But worryingly, cost inflation will continue to be a negative factor throughout the year. The food business gross profit margin in the first quarter of 65 was 45.8% (compared to the full-year assumption of 46.3%). This means that the 2022 projection still has downside risks. However, the company has passed costs to selling prices. and will adjust the new promotion to mitigate the impact of the rising cost

So overall, although sales tend to be bright this year. However, we believe that the pressure on margin issues, especially in the food business, may affect share price sentiment in the near-to-medium term. Therefore, we maintain our HOLD rating with a valuation of Bt43.50 based on 2023F EV/EBITDA of 14.6x, equal to the long-term average +1.0 SD.

Expected 3 years to grow as before covid-19

side Pi Securities Company Limited Assessing the business direction of CENTEL that the net loss in the first quarter of this year was 44 million baht, compared with a net loss of 476 million baht in the first quarter of ’21 and a net profit of 152 million baht in the fourth quarter of 2021, in line with our expectations. EBITDA in the first quarter of 2021 increased the same as the previous year but remained stable qoq at 951 million baht, driven by a strong recovery in hotel business compared to the previous year. from the recovering Thai tourism sector In addition, continued strength in Maldives due to the high season and strong performance of the Dubai hotel business due to the Dubai World Expo, resulting in negative earnings forecasts in 2022 while the business continues to grow. continued during the next 3 years until reaching the pre-Covid-19 level in 66

Strong cash flow and balance sheet

in accordance with KTBST Securities recommends “BUY” with a target price of 50 baht/share. After the overall picture is still as expected. Meanwhile, the food business picture in Apr-May 22 still has a very good growth of 20-40% year-on-year in SSSG from 10% in the first quarter of this year because consumption has recovered well. As for hotel business, April 22 Occ. Rate hit a new high of 50% from 29% in the first quarter of this year, while rising food costs such as palm oil remained manageable. with a gradual increase in product prices

Therefore, the net profit forecast for this year is still estimated at 307 million baht, recovering well from the previous year. Before a net loss of -1.7 billion baht, while the operating results in the 2nd quarter of 65 are expected to reduce losses from the previous year. This is because the overall tourism industry has clearly recovered after Thailand has a more relaxed policy on immigration.

The share price in the past month has dropped -2% against the SET as its first-quarter results turned a loss that was lower than the market expected profit due to tax and rental payments. more than expected however It is believed that the tourism situation in the second half of the year will recover well from the preparation of the cancellation of Thailandpass on June 1, 22 and the announcement of Covid-19 as an endemic disease on July 1, 22, in addition to CENTEL. It is the stock with the strongest cash flow and balance sheet in the group (net D/E = 0.87x).

Have a chance to earn food business, reaching ten billion

side Finansia Cyrus Securities reported that the research department recommends “Gain weight” to invest in CENTEL shares Expect to see a recovery in both the hotel and restaurant business. Recently, the Occ Rate in April was at 50%, compared to 26% in 1Q22, while SSSG grew more than +20% and is expected to continue to be good in May. The long-term is expected to benefit from a recovery. of foreign tourists Especially the full opening of the country in the second half of the year 65, so we recommend “buy” with a target of 49 baht.

Inflation and costs still put pressure on the restaurant business.

In addition, from CENTEL’s business outlook, analysts estimate the restaurant business direction is in a recovery phase. From the past, being hit by heavy monsoons and many waves from the Covid-19 situation and the lockdown that occurred, but this year 2022 after the Covid-19 situation begin to unravel The number of infected people has dwindled until measures are more relaxed, including opening a country to support tourists, which will benefit these stocks quite a bit.

that’s because The economic situation in the country began to recover gradually. began to prepare to open more countries I started to see some restaurant businesses starting to open for employees. There is a business that has returned to bustling. Therefore, we believe that we will see in terms of the direction of sales growth of various branches. especially the retail business as a whole including in the matter of the business that is a restaurant It will begin to see from the Same Store Sales or sales of various stores. with branches nearby At the same time, if still able to maintain this level For at least another 1-2 years, that means that the income of the restaurant business, especially in the case of CENTEL, should come back to tens of billions once again.

Therefore, if looking specifically at the restaurant business You will start to see that the sector that owns the business, income from restaurants, especially on the side that is listed companies, has become less negative. That means profits are recovering. And there is an expectation that it will turn to be more positive in the second half of the year.

As for the variables that may cause in the matter of profit may be slower than the estimate. What might be worth keeping an eye on would be costs. which began to see the impact since the end of the 1st quarter of 2016, whether it is energy costs and the impact on the raw materials that it comes up with the price of agricultural products Because these costs will inevitably affect restaurant operators. Including the need to keep an eye on whether inflation will pass its peak or not. June is a month that should see a clearer picture.

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