Summary of investment
The large-scale renovation of the Wangfu half-hotel in Beijing has greatly increased the average rentable room income of the first phase of the hotel. The increase is expected not only to offset the impact of the small number of rooms on income, but also to provide greater room income.
The construction projects of the new hotel are in good progress.
General situation of the company
Forecast for the first half of 2017: in the first half of 2017, the total revenue of major hotels fell slightly by about 0.4% to HK $2.596 billion, while EBITDA rose by 7% to HK $561 million, mainly due to the general recovery of the hotel industry. The profit attributable to shares increased by 16.2% to HK $519 million during the reporting period, mainly due to a sharp increase in revaluation income of 565% to HK $359 million in the first half of 2017, which accounted for a large part of the increase in profits. In the revaluation income of this property industry, most of the property revaluation income is earned by the comprehensive water supply project. Excluding property revaluation earnings and other unusual income and expenses, equity attributable to basic earnings increased by 19%, equivalent to basic earnings of HK $0.12 per share.
The renovation project of the Beijing Wangfu half Hotel has been completed in stages: in 2015, the Grand Hotel started the renovation project of the Beijing Wangfu half Hotel, and the first phase of the hotel's rooms were completed and available for forecast in September 2016. the second phase of the renovation of rooms is expected to be completed in August 2017. The original 525 rooms of the Beijing Wangfu Hotel have been completed, but after renovation, the total number of rooms has been reduced to 230. However, the number of noodles in guest rooms has increased, and they are the largest in Beijing, making the Beijing Wangfu semi-hotel a leader in the Beijing hotel market. In terms of room quality, many restaurants at the Wangfu semi-luxury Hotel in Beijing have been renovated, and most of the rentals have been successfully retained. Coupled with the implementation of an one-week strategy, the focus of the guest group is diplomacy and mass budget. In view of the fact that more and more conferences and conferences will be held in Beijing, the Wangfu semi-hotel Beijing is expected to benefit from the budget of the batch.
The room revenue of the Beijing Wangfu half-hotel has increased significantly after the renovation project, and the average rentable room revenue has increased by nearly 300% compared with the first half of 2016. Therefore, when the renovation project is completed and all 230 rooms are available, we estimate that the Beijing Wangfu half-hotel will have a higher growth, which is due to the impact of the room or the hotel renovation in the first half of 2017. Therefore, we plan that when all the projects are completed, the housing market may have a higher growth.
The construction of the new hotel is in good progress: the half-hotel project in London is in good progress. the construction project was originally a commercial investment industry under the bazaar. In April 2017, the last public room tenant of the building was released. As a result, the demolition work has been fully underway. The London half-hotel has an estimated 189 rooms. In particular, the London half-hotel will have 24 to 28 luxury Chinese residences at the same time. We estimate that this batch of luxury residential buildings will cover most of the construction costs of the London half-hotel project, with a current estimated total construction cost of 600 million tons and an estimated completion date of 2021.
In addition, the Istanbul half Hotel will also be built in Istanbul, and the collection has begun to demolish the original construction of the site. The Istanbul half Hotel will be a sea hotel with 180 rooms as part of a Galataport project in Istanbul that integrates with its partners, which is made up of museums, art galleries, restaurants and hotels. In addition, recently, relations between Russia and Turkey have greatly improved, which is expected to attract more guests from Russia to Istanbul, so that the clientele of the Istanbul half-hotel is no longer limited to the countries of the sea. The hotel's estimated completion date is 2019.
Investment and investment operations continue to be stable: in the first half of 2017, the project is still the largest source of income from investment and investment services, accounting for about HK $310 million, or 66.5% of the total rental income. The second largest income collected from investment business is the Lingxiao Tower located in Shanhai. all the items are leased out during the reporting period. apart from rental income, the collection company can also earn extra income from the admission of skyscraper 428 and the package of tickets sold at the time of the collection. If the major improvement projects to be carried out in the mountainous area must meet the requirements of the government, the centralized economic rights in the mountain area will be granted for a period of 10 years. We believe that this is an encouraging opportunity. Together, the skyscraper 428 will continue to play the same role in generating stable regular income.
1-5 Grosvenor Place will be converted into a half-hotel in London. The property store is originally a member of the investment business of the hotel. By then, the property industry has been empty and the rental income during the reporting period is only about HK $1400. As the demolition has begun, the property store will no longer be classified as a property investment and will no longer generate any rental income. As a result, our overall income from investment services remains at the current level.
Valuation and valuation
Our valuation model is HK $12.50: the new hotel construction projects of the Grand Hotel are in good progress. specifically, the half Hotel in Istanbul will be completed in 2019. We expect that the hotel will benefit from the relationship between Russia and Turkey, thus expanding its clientele. In addition, the Beijing Wangfu Banwei Hotel has almost completed its renovation, and its average rentable room revenue has exceeded our original expectations. Therefore, we adjust our forecast for its performance and raise its target to HK$12.50, which is equivalent to the price-to-earnings ratio and price-to-price ratio of 19.52 and 0.55, which is a "neutral" level.