Global Premium Hotels Limited ("GPH" or "Company") is offering 13m shares for the public and 437m via placement at $0.26 each. The IPO will close on 24 April at 12pm. The Company is a hotel operator and operates under the "Fragrance" or "Parc Sovereign" brands.
Pro-forma revenue for FY2010 was $44.2m and net profit was $19.9m. For the 9 months in FY2011, the revenue was $38.9m and the net profit was $17.3m. The company intends to distribute at least 80% of its net profit after tax for FY2012. The Company intends to expand its rooms and into the Asia Pacific region in future under that 2 brands. My personal opinion for the Group will be for it to move up the value chain and create more Parc Sovereign hotels.
The post IPO number of shares is 1 billion and the EPS using the enlarged share cap for 9 months FY2011 is Singapore 1.66 cents. Assuming the occupancy rate remains the same and we pro-rate it to the full year, the EPS will be around Singapore 2.21 cents. That translate into a listing PER of around 11.76x. The NAV per share is around 28.97c. The market cap is $260m based on the IPO price.
With visitors rate continue to remain robust and assuming the average occupancy rates remain the same, the net profit after tax will be around $22m. The dividend payout will be 80% x $22m = $17.6m. Dividend per share = Singapore 1.76 cents for FY2012. That translate into a yield of 6.7%. This will definitely be attractive to investors who wants a decent return for their cash. It is a pity this 80% payout is only for FY2012. The intent after FY2012 was not stated.
The Company is basically a spin-off of the hotel operations from the Fragrance Group. The closest comparable listed on SGX are probably Amara, HPL, OUE, Hotel Properties Ltd etc but they are trading at very wide ranging PE multiples. Looking at the current IPO market sentiment, investors who want to stag this counter could probably do so. I will give it a 2 chilli rating for its high yield for 2012 and a fair trading range of between 29 cents to 35 cents based on 13-16x FY2011 EPS.
The two things that i don't really like is the "spin-off story" and that OCBC being the placement/underwriter. The track record by OCBC for IPO isn't great. Just for the records, the 26c price was at the lower end of the 25-28c book building by OCBC a few weeks back. Happy IPOing.