Mantra Group Ltd

MTR Details

Great performance from Resorts: For FY17, Mantra Group Ltd (ASX: MTR) reported 13.7% yoy (year on year) growth in total revenue at $689m while posting 12.7% growth in underlying EBITDAI of $101.2m. Underlying NPAT was up 14.2% to $47.2m and statutory NPAT stood at $45.6m. Accordingly, statutory basic EPS increased to 15.3 cents per share, compared to 13.8 cents per share for FY2016. Resorts delivered revenue of $316.2 million and EBITDAI of $45.6 million representing very strong increases on FY2016 (29.5% and 31.0%, respectively). CBD revenue increased by $5.1 million representing a year-on-year increase of 1.6% and underlying EBITDAI was $46.7 million, an increase of 1.5%. Central Revenue and Distribution revenue increased by 10.3% to $52.3 million while underlying EBITDAI grew by 5.4%.


Financial summary; (Source: Company Reports)

During the FY17, Mantra Group increased its portfolio by six new properties across several brands and operating models. New properties included the 1,176 room Mantra-branded Ala Moana Hotel in Honolulu Hawaii, Mantra Residences @ Southport Central, Peppers Kings Square Hotel at Perth, Mantra the Observatory at Port Macquarie, Mantra Club Croc at Airlie Beach and Tribe Perth (Mantra Group is managing Tribe Perth as its first external brand). Mantra Hotel at Sydney Airport also opened in July 2017. Moreover, the recent acquisition of the Art Series Hotel Group, due to settle in late 2017 has demonstrated Mantra Group’s ability to identify and secure sizeable assets. This acquisition enhances Mantra Group’s already extensive portfolio with a selection of unique properties in cultural hubs in Australian capital cities, offering additional experience options under this unique brand. Development pipeline remains strong for the Group with Mantra MacArthur Hotel, Canberra and the first two (of three) towers of FV by Peppers, which heralds the arrival of the Peppers brand in Brisbane, due to open in H1FY2018. Importantly, the Gold Coast region is also expected to significantly benefit from the Gold Coast 2018 Commonwealth Games.

The stock has moved up 8.2% in the past six months while it is down 4.6% in the past one year. The stock slipped by 2% on 29 August 2017 post the result release as the group’s guidance of underlying EBITDAI of between $107 million and $115 million seem to be little below market expectations. However, given the contribution from recent Art Series Acquisition and benefits due from Gold Coast 2018 Commonwealth Games, we believe the stock has great potential. We maintain a “Buy” recommendation on the stock at the current price of $ 2.86

Chorus Ltd

CNU Details

Earnings impacted by increasing competition: Chorus reported a net profit after tax (NPAT) of $113m and earnings before interest, tax, depreciation and amortisation (EBITDA) of $652m for the year ended 30 June 2017. Operating revenue for the period was $1,040m (FY16: $1,008m) and operating expenses were $388m (FY16: $414m). Depreciation and amortisation for the period was $339m (FY16: $327m) with earnings before interest and tax (EBIT) of $313m (FY16: $267m). Chorus’ financial result for 2017 was underpinned by a strong focus on costs as it streamlined copper provisioning processes and began capitalising labour expenses relating to certain fibre provisioning costs. However, Chorus’ FY17 EBITDA declined relative to adjusted EBITDA for FY16 of $677 million, led by reduction in revenue as other fibre companies continued to gain connections in their fibre rollout areas. The company expects FY18 EBITDA to be $625 - $650 million and capital expenditure of $780 - $820 million. The stock thus declined 6.5% on 29 August 2017 after the company announced its annual results. We give “Hold” recommendation on the stock at the current price of $ 3.71

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