Home Inns & Hotels Q4 Profit Soars

(RTTNews) - Chinese economy hotel chain Home Inns & Hotels Management, Inc. (HMIN) reported Wednesday a profit for the fourth quarter that soared from last year, reflecting lower losses on change in fair value of convertible notes and revenue growth. The company also provided revenue guidance for the first quarter and full-year 2015.

"We are very gratified that despite sustained market challenges, we met our previously provided revenue expectations for the fourth quarter and achieved year-over-year adjusted net margin improvement for the ninth consecutive quarterly period," CEO David Sun said in a statement.

The Shanghai, China-based company reported net income of RMB 84.6 million or $13.6 million for the fourth quarter, sharply higher than RMB 12.85 million in the prior-year quarter.

Earnings per share surged to RMB 0.88 or $0.14 from RMB 0.14 last year. On a per ADS basis, earnings soared to RMB 1.77 or $0.28 from RMB 0.27 last year.

Excluding items, adjusted net income for the quarter was RMB 110.9 million or $17.9 million, compared to RMB 91.8 million in the year-ago quarter.

Adjusted earnings per share was RMB 1.13 or $0.18, compared to RMB 0.96 last year. On a per ADS basis, adjusted earnings was RMB 2.26 or $0.36, compared to RMB 1.91 last year.

On average, three analysts polled by Thomson Reuters expected the company to report earnings of 2.37 yuan per ADS for the quarter. Analysts' estimates typically exclude special items.

Total revenues grew 1.6 percent to RMB 1.64 billion or $263.6 million, from RMB 1.61 billion last year.

Net revenues for the quarter improved 1.6 percent to RMB 1.53 billion or $247 million, from RMB 1.51 billion in the same quarter last year, but missed four Wall Street analysts' consensus estimate of 1.56 billion yuan.

"Performance of our mature economy hotels remained relatively resilient despite the market softness. Our franchise focused strategy, effective cost control and productivity enhancement initiatives did a great deal to help protect our margin and bottom line. We are also very pleased with the positive development and performance of our mid-scale Yitel hotels," Sun stated.

Leased-and-operated hotels revenues for the quarter edged down 0.8 percent RMB 1.39 billion or $224.2 million, while revenues for franchised-and-managed hotels increased 17.4 percent to RMB 244.2 million or $39.4 million from the year-ago quarter.

Revenue per available room or RevPAR, for the quarter declined to RMB 130 from last year's RMB 137.

Occupancy rate contracted 440 basis points to 79.6 percent from last year's 84.0 percent, but average daily rate remained flat with last year at RMB 163.

Total operating costs and expenses, as a percentage of total revenues, increased 30 basis points to 87.6 percent from last year.

Homeinns Hotel Group added a net of 113 hotels in the fourth quarter, including the opening of 129 new hotels and the closure of 16 hotels.

Separately, the company said its Board of Directors has approved a share repurchase program of up to $35 million, effective for one year from March 11, 2015.

Looking ahead to the first quarter, the company expects revenues in a range of RMB 1.45 billion to RMB 1.48 billion. Analysts currently expect first-quarter revenues of RMB 1.47 billion.

For fiscal 2015, Home Inns Group currently expects total revenues between RMB 6.80 billion to RMB 7.0 billion. Street is currently looking for full-year 2015 revenues of RMB 6.76 billion.

The company also said it targets opening at least 400 new hotels in 2015, including about 10 percent as leased-and-operated hotels and 90 percent as franchised-and-managed hotels.

Looking ahead, Sun added, "As we look ahead into 2015, we are not expecting a quick market rebound and therefore we will be careful in balancing the speed of new hotel development with profitability and will also take the opportunity to fine-tune our focus for hotel expansion."

HMIN closed Wednesday's regular trading session at $22.37, down $2.08 or 8.51% on a volume of 0.35 million shares.