Singapore | Hotels, Restaurants & Leisure

Asia Pacific Equity Research

GLOBAL PREMIUM HOTELS | BUY

MARKET CAP: USD 229M AVG DAILY TURNOVER: USD 0.5M 1 Feb 2013 Company Update

ASSET VALUE PLAY, RAISE FV TO S$0.33

4Q12 revenue rises 7% YoY NAV rises 25% QoQ Maintain BUY

BUY (maintain)
Fair value add: 12m dividend forecast versus: Current price 12m total return forecast S$0.33 S$0.014 S$0.270 27%

4Q12 results in line Global Premium Hotels (GPH) performed in line with our expectations in 4Q12. 4Q12 revenue increased by 6.8% YoY to S$15.2m, while gross profit margin declined 1.4 ppt YoY to 86.1%. EBIT margin fell 1.4 ppt YoY to 50.7%, partially due to increase in staff costs in relation to the general wage increases and additional staff required for Fragrance Riverside. Hotel room revenue increased by S$1.2m YoY, due mainly to a S$1.4m increase in revenue from Fragrance Emerald (underwent renovations in late 2011), Parc Sovereign Hotel, and Fragrance Riverside (latter two hotels opened in Feb 2011 and Nov 2011 respectively). The performance of the remaining hotels was affected by the temporary closure of Fragrance Ruby for an asset enhancement initiative. FY12 dividend yield of 5.2% As we expected, FY12 DPU is 1.4 S cents, translating into a dividend yield of 5.2% (80% payout ratio of net profit after tax). Management has not yet articulated dividend policy for FY13 and beyond. We assume a payout ratio of 10%, giving a FY13F dividend yield of 0.6%. Asset value play As part of comprehensive income in 4Q12, revaluation of the land and hotel buildings led to a gain of S$83.7m, equivalent to 10.1% of 30 Sep 2012's PPE. The revaluation gain contributed to a dramatic 25% QoQ climb in NAV per share to 38.98 S cents. 22 of the 23 hotels run by GPH are wholly owned by the group (including one Parc Sovereign Mid-tier hotel); 19 are on freehold sites, one is on a 999-year leasehold site and two are on 99-year leasehold sites. While we are cautious about the 1H13 outlook for the Singapore hospitality sector, GPH is trading at an undemanding P/B of 0.69x. Maintain BUY Lowering our capitalisation rates, which were previously too conservative, especially given that the majority of GPH's properties are freehold, we raise our FV from S$0.29 to S$0.33 (using a 10% discount to RNAV) and maintain a BUY on GPH.

Analysts Sarah Ong (Lead) +65 6531 9678 sarahong@ocbc-research.com Eli Lee +65 6531 9112 elilee@ocbc-research.com

Key information Market cap. (m) Avg daily turnover (m) Avg daily vol. (m) 52-wk range (S$) Free float (%) Shares o/s. (m) Exchange BBRG ticker Reuters ticker ISIN code GICS Sector GICS Industry Top shareholder S$284.0 / USD229.4 S$0.6 / USD0.5 2.4 0.23 - 0.305 44.0 1,052.0 SGX GPHL SP GPHL.SI P9J Consumer Disc. Hotels, Restaurants & Leisure Fragrance Group - 52.3% 1m 9 5 3m 13 5 12m na na

Relative total return Company (%) STI-adjusted (%) Price performance chart
Shar e Pr ice (S$ ) 0.33 0.31 0.29 0.27 0.25 0.23 Jul-12 Oct-12

Index Level 4000 3740 3480 3220 2960 2700 Jan-13

Fair Value
Sources: Bloomberg, OIR estimates

GPHL SP

FSSTI

Key financial highlights Year Ended Dec 31 (S$m) Revenue PATMI PER (x) P/NAV (x) EPS (S cents) Cons. EPS (S cts) Dividend yield (%) Gross margin (%) Net income margin (%) ROE (%) FY11 53.1 22.6 6.6 0.9 4.1 na 6.7 86.7 42.6 4.1 FY12 60.2 18.5 15.4 0.7 1.8 na 5.2 86.1 30.7 3.6 FY13F 62.5 18.0 15.8 0.7 1.7 1.9 0.6 86.1 28.8 4.4 FY14F 71.4 21.6 13.1 0.7 2.1 2.7 0.8 86.1 30.3 5.1

Industry-relative metrics
P er c ent i l e 0t h 25t h 50t h 75t h 100t h

M k t Cap B et a ROE PE PB

Company

I ndust r y A v er age

Note: Industry universe defined as companies under identical GICS classification listed on the same exchange. Sources: Bloomberg, OIR estimates

Please refer to important disclosures at the back of this document.

MICA (P) 035/06/2012

OCBC Investment Research Singapore Equities

Exhibit 1: 4Q12 financial highlights

4Q12 (S$m) Revenue Cost of sales Gross profit Other operating income Admin expenses Finance cost PBT Income tax PAT MI PATMI Sources: Company financials 15.2 -2.1 13.1 0.2 -5.6 -2.3 5.4 -1.1 4.3 0.0 4.3 4Q11 (S$m) 14.2 -1.8 12.4 0.1 -5.2 -0.7 6.7 -1.4 5.3 0.0 5.3 YoY Chg (%) (YoY) 6.8% 19.1% 5.0% 54.1% 7.9% 208.7% -18.8% -20.5% -18.3% nm -18.3% 3Q12 (S$m) 14.9 -2.0 12.9 0.2 -5.7 -2.3 5.1 -0.9 4.2 0.0 4.2 QoQ Chg (%) (QoQ) 1.9% 5.9% 1.3% -14.5% -2.7% -2.1% 6.7% 18.7% 4.0% nm 4.0%

Exhibit 2: Revalued Net Asset Value (RNAV) Valuation Valuation of PPE (including future completed Tyrwhitt hotel) Book value of PPE as of 31 Dec 2012, plus additional capex of ~S$28.1m for Tyrwhitt site Surplus NAV RNAV No. of shares outstanding (m) RNAV per share (S$) Discount/(Premium) to RNAV Fair Value (S$) Current Price (S$) Price Upside (%): Distribution Yield (%): Total Return (%): Source: OIR estimates in S$m 926 945 -20 410 390 1,052.0 S$0.37 10.0% S$0.33 S$0.270 22.2% 5.2% 27.4%

OCBC Investment Research Singapore Equities

Company financial highlights

Income statement Year Ended Dec 31 (S$m) Revenue Cost of sales Gross profit Other operating income Admin expenses Finance cost Profit before tax Income tax Profit after tax PATMI

FY11 53.1 -6.3 46.8 0.5 -16.4 -2.9 27.9 -5.3 22.6 22.6

FY12 60.2 -8.0 52.2 0.7 -23.0 -7.0 22.9 -4.5 18.5 18.5

FY13F 62.5 -8.7 53.8 0.7 -22.9 -9.1 22.5 -4.5 18.0 18.0

FY14F 71.4 -9.9 61.4 0.8 -26.2 -9.1 27.0 -5.4 21.6 21.6

Balance sheet As at Dec 31 (S$m) Cash and cash equivalents Total current assets PPE Total assets Current financial liabilities Total current liabilities Non-current financial liabilities Total liabilities Total equity Total equity and liabilities

FY11 15.6 48.1 749.6 797.8 129.6 157.1 9.0 192.6 605.2 797.8

FY12 15.3 18.3 917.4 935.7 17.6 35.8 461.4 525.6 410.0 935.7

FY13F 4.7 8.4 932.7 941.1 17.6 36.0 461.4 525.8 415.3 941.1

FY14F 18.6 21.9 939.3 961.2 17.6 36.3 461.4 526.1 435.1 961.2

Cash flow statement Year Ended Dec 31 (S$m) Profit before tax Adjustments Operating income before working cap chgs Change in working capital Cash flow from operating activities Cash flow from investing activities Cash flow from financing activities Change in cash Cash at beginning of period Cash at end of period

FY11 27.9 6.1 34.0 -0.1 25.9 57.9 -71.0 12.8 2.8 15.6

FY12 22.9 10.9 33.9 0.3 22.4 -433.4 410.8 -0.3 15.6 15.3

FY13F 22.5 12.7 35.2 0.1 30.9 -18.9 -12.7 -0.8 15.3 4.7

FY14F 27.0 13.3 40.3 0.1 35.8 -10.8 -1.8 23.2 4.7 18.6

Key rates & ratios EPS (S cents) PER (x) P/NAV (x) Gross margin (%) Operating margin (%) Net income margin (%) Gross gearing (%) Dividend yield (%) ROE (%) ROA (%) Sources: Company, OIR forecasts

FY11 4.1 6.6 0.9 86.7 58.0 42.6 17.4 6.7 4.1 2.9

FY12 1.8 15.4 0.7 86.1 49.7 30.7 51.2 5.2 3.6 2.1

FY13F 1.7 15.8 0.7 86.1 49.7 28.8 50.9 0.6 4.4 1.9

FY14F 2.1 13.1 0.7 86.1 49.7 30.3 49.8 0.8 5.1 2.3

Company financial highlights

OCBC Investment Research Singapore Equities

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RATINGS AND RECOMMENDATIONS: - OCBC Investment Researchs (OIR) technical comments and recommendations are short-term and trading oriented. - OIRs fundamental views and ratings (Buy, Hold, Sell) are medium-term calls within a 12-month investment horizon. - As a guide, OIRs BUY rating indicates a total return in excess of 10% given the current price; a HOLD trading indicates total returns within +/-10% range; a SELL rating indicates total returns less than -10%. - For companies with less than S$150m market capitalization, OIRs BUY rating indicates a total return in excess of 30%; a HOLD trading indicates total returns within a +/-30% range; a SELL rating indicates total returns less than -30%.

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Important disclosures