Home Inns & Hotels Q4 Profit Doubles; Provides Rosy Outlook

(RTTNews) - Chinese economy hotel chain Home Inns & Hotels Management, Inc. (HMIN) reported Thursday a profit for the fourth quarter that doubled from last year, despite revenues per room remaining flat, reflecting lower costs and expenses as well as revenue growth amid higher occupancy rate. The company also provided revenue guidance for the first quarter and full-year 2014, above Street view.

The company also announced that CFO Huiping Yan will resign, effective April 30, 2014, in pursuit of opportunities outside of the company. Yan joined the Company in July 2009 as the senior vice president of finance and strategy and was later promoted to CFO in May 2010. The company has launched a search for a replacement, with May Wu, current chief strategy officer and former CFO, named acting CFO, effective May 1, 2014, until a suitable candidate is selected.

"Despite the weak market environment, our revenue results are within expectations, and the Company achieved continued margin expansion for the fourth consecutive quarter in 2013," CEO David Sun said in a statement.

The Shanghai, China-based company reported net income of RMB 12.85 million or $2.13 million for the fourth quarter, higher than RMB 6.28 million in the prior-year quarter.

Earnings per share surged to RMB 0.14 or $0.02 from RMB 0.07 last year. On a per ADS basis, earnings soared to RMB 0.27 or $0.04 from RMB 0.14 last year.

Excluding items, adjusted net income for the quarter was RMB 91.81 million or $15.17 million, compared to RMB 80.60 million in the year-ago quarter.

Adjusted earnings per share was RMB 0.96 or $0.16, compared to RMB 0.87 last year. On a per ADS basis, adjusted earnings was RMB 1.91 or $0.32, compared to RMB 1.74 last year.

On average, four analysts polled by Thomson Reuters expected the company to report earnings of 2.18 yuan per ADS for the quarter. Analysts' estimates typically exclude special items.

Net revenues for the quarter improved 9.8 percent to RMB 1.51 billion or $249.63 million, from RMB 1.38 billion in the same quarter last year, and missed five Wall Street analysts' consensus estimate of 1.54 billion yuan.

Leased-and-operated hotels revenues for the quarter grew 7.4 percent RMB 1.40 billion or $231.5 million, and revenues for franchised-and-managed hotels increased 29.4 percent to RMB 208.0 million or $34.4 million from the year-ago quarter.

Revenue per available room or RevPAR, for the quarter remained flat with last year at RMB 144.

Occupancy rate expanded 20 basis points to 84.0 percent from last year's 83.8 percent, but average daily rate edged down 1.2 percent to RMB 163 from RMB 165 a year ago, mainly due to soft market conditions and absence of pricing opportunities.

Total operating costs and expenses, as a percentage of total revenues, contracted 360 basis points to 87.4 percent from last year.

Looking ahead to the first quarter, the company expects revenues in a range of RMB 1.46 billion to RMB 1.49 billion. Analysts currently expect first-quarter revenues of RMB 1.46 billion.

For fiscal 2014, Home Inns Group currently expects total revenues between RMB 6.80 billion to RMB 7.0 billion. Street is currently looking for full-year 2014 revenues of RMB 6.69 billion.

The company also said it targets opening no less than 450 new hotels in 2014, including 70 to 90 leased-and-operated hotels and 360 to 380 franchised-and-managed hotels.

The company noted that it expects a more moderate revenue growth going forward, and is confident of delivering stable margin expansion, meaningful earnings growth and increasing cash generation to create greater value for shareholders.

Looking ahead, Sun added, "While we are experiencing near term challenges in the macro environment, we continue to believe in the long-term growth prospects of China's travel and lodging industry."

HMIN closed Wednesday's regular trading session at $35.41, down $0.19 or 0.53% on a volume of 0.53 million shares.