Home Inns & Hotels Q3 Profit Triples; Backs 2013 Outlook

(RTTNews) - Chinese economy hotel chain Home Inns & Hotels Management, Inc. (HMIN) reported Thursday a profit for the third quarter that more than tripled from last year, despite lower revenues per room and occupancy rate, reflecting a drop in costs and expenses and revenue growth. The company also maintained its revenue guidance for the full-year 2013.

"We are pleased to report steady revenue growth and consistent margin expansion for the third quarter. Even though a market-wide recovery has yet to arrive, our core mature hotels maintained stable performance and Motel 168 generated further operating improvements as we completed all primary integration tasks," CEO David Sun said in a statement.

The Shanghai, China-based company reported net income of RMB 108.0 million or $17.65 million for the third quarter, sharply higher than RMB 33.71 million in the prior-year quarter.

Earnings per share surged to RMB 1.16 or $0.19 from RMB 0.37 last year. On a per ADS basis, earnings soared to RMB 2.31 or $0.38 from RMB 0.73 last year.

Excluding items, adjusted net income for the quarter was RMB 180.94 million or $29.57 million, compared to RMB 135.83 million in the year-ago quarter.

Adjusted earnings per share was RMB 1.85 or $0.30, compared to RMB 1.47 last year. On a per ADS basis, adjusted earnings was RMB 3.70 or $0.61, compared to RMB 2.93 last year.

Net revenues for the quarter improved 8.8 percent to RMB 1.63 billion or $266.83 million, from RMB 1.50 billion in the same quarter last year.

Revenue per available room or RevPAR, for the quarter declined to RMB 154 from last years RMB 157, driven by higher exposure to lower tier markets where economic conditions remained relatively soft.

Occupancy rate also dipped 90 basis points to 89.4 percent from last year's 90.3 percent, and average daily rate edged down to RMB 173 from RMB 174 a year ago.

Total revenues from Motel 168 hotels grew 7.6 percent to RMB 429.1 million from RMB 398.9 million last year, with occupancy rate improving 240 basis points along with higher average daily rate and revenue per available room. The company acquired Motel 168 and consolidated its operating and financial results since October 1, 2011.

Total operating costs and expenses, as a percentage of total revenues, contracted 390 basis points to 80.9 percent from last year's 84.8 percent.

"Meanwhile, strong development of franchised-and-managed hotels and effective cost control initiatives at the hotel operational level resulted in margin expansion for the third consecutive quarter," Sun stated.

Looking ahead to fiscal 2013, Home Inns Group continues to expect total revenues in the range of RMB 6.35 billion to RMB 6.50 billion, including Motel 168 brand revenues between RMB 1.55 billion and RMB 1.60 billion.

The company also said it still anticipates opening no less than 400 new hotels in 2013, including 65 to 70 leased-and-operated hotels.

Looking ahead, Sun added, "We are optimistic about the stable and gradually-improving market conditions in 2014 and beyond. We believe in the long-term prospects of China's travel and lodging industry and will maintain a suitable expansion pace furthering franchise-focused growth and multi-brand development in the next two to three years."

HMIN closed Thursday's regular trading session at $37.16, up $0.01 or 0.03% on a volume of 0.27 million shares. The stock gained a further $0.73 or 1.96% in after-hours trading.