Home Inns & Hotels Q2 Profit Rises - Update

(RTTNews) - Chinese budget hotel chain Home Inns & Hotels Management Inc. (HMIN), Tuesday reported an increase in profit for the second quarter, as revenues grew despite lower occupancy rate and revenue per room. Moving ahead, the company detailed a strong outlook for the third quarter.

Shanghai, China-based Home Inns & Hotels' second-quarter profit rose to 108.2 million yuan or 2.27 yuan per ADS from 94.8 million yuan or 1.68 yuan per ADS last year. On a US dollar basis, earnings were $17.4 million or $0.18 per share for the quarter.

Adjusted income improved to 168.4 million yuan or 3.38 yuan per ADS from 139.7 million yuan or 2.89 yuan per ADS last year. Analysts polled by Thomson Reuters expected earnings of 3.31 yuan per ADS for the quarter. Analysts' estimates typically exclude special items.

Home Inns, the largest budget-hotel chain in China by number of rooms, said revenues grew 6 percent to 1.70 billion yuan from 1.60 billion yuan last year. Net revenues, which excludes business taxes and surcharges, grew to 1.59 billion yuan from 1.50 billion yuan last year. Analysts had a consensus revenue estimate of 1.59 billion yuan for the quarter.

Revenue per available room or RevPAR, a key lodging metric for investors, for the quarter dropped to 142 yuan from 145 yuan last year. Occupancy rate dropped to 86.7 percent from last year's 87.0 percent, due to soft market conditions and dilutive impact of newly opened hotels, while average daily rate slipped to 164 yuan from 167 yuan last year.

Home Inns Group added a net of 133 hotels in the second quarter, and as of June 30, the company operated 2,374 hotels across 306 cities in China under four brands.

Looking forward to the third quarter, the company expect revenues of 1.88 billion yuan to 1.90 billion yuan. Analysts currently expect third-quarter revenues of 1.77 billion yuan.

Separately, the company said it has appointed Cathy Xiangrong Li as new Chief Financial Officer of the company, effective August 25, 2014. Also, May Wu, the company's chief strategy officer and interim chief financial officer, will remain as chief strategy officer after Li assumes the CFO position, the company said.

HMIN closed Tuesday's trading at $34.59, down $0.05 or 0.14%, on the Nasdaq. The stock further rose $0.46 or 1.33%, in after-hours trade.