Yamato Maintained Grand Hotel (0045.HK) outperformed market ratings, with a target price of HK$15.55.

Yamato pointed out that Grand Hotel's 2010 revenue and earnings before interest, taxes, depreciation, and amortization were all higher than Yamato's expectations. Earnings before interest, taxes, depreciation and amortization of major hotels increased 24% year on year to HK$1,143 million in 2010, and revenue increased 12% year on year to HK$4.707 billion. Yamato said that it still has a positive view on the profit prospects and asset appreciation prospects of large hotels in their core market, Hong Kong.

Yamato pointed out that the company's management indicated a bullish trend in revenue per rentable room for all of its asset portfolios so far this year. Although its corporate value/interest tax earnings before depreciation and amortization and price-earnings ratio appear high, Yamato believes that the stock provides investors with an opportunity to invest in high-end hotels and high-end residential assets, and that its stock price is greatly discounted from net asset value. Daiwa expects its net asset value per share to be HK$25.60 in 2011.

The stock closed up 0.7% to HK$14.10 on Tuesday.