Home Inns Swings To Q1 Profit - Update

(RTTNews) - Chinese budget hotel chain Home Inns & Hotels Management Inc. (HMIN), Monday reported a swing to profit in the first quarter from a loss last year, as revenues increased and operating costs dropped, despite lower occupancy rate and revenue per room. Moving ahead, the company detailed a strong outlook for the second quarter.

Shanghai, China-based company Home Inns & Hotels Management reported a first-quarter profit of 74.9 million yuan or 0.11 yuan per share, compared to a loss of 19.4 million yuan or 0.42 yuan per share last year.

Adjusted income for the quarter improved to 32.1 million yuan or 0.67 yuan per share from 10.3 million yuan or 0.22 yuan per share last year. On average, four analysts polled by Thomson Reuters expected earnings of 0.59 yuan per share 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 5 percent to 1.47 billion yuan from 1.40 billion yuan. Net revenues, which excludes business taxes, grew to 1.38 billion yuan from 1.31 billion yuan last year. Analysts expected revenues of 1.40 billion yuan for the quarter.

Revenue per available room or RevPAR, a key lodging metric for investors, for the quarter dropped to 127 yuan from 131 yuan last year. Occupancy rate dropped to 81.3 percent from last year's 83.6 percent, due to soft market conditions, while average daily rate remained flat at 156 yuan year-over-year.

"Despite continued softness in macroeconomic conditions in the first quarter, we achieved revenues within our target range and are pleased to deliver the fifth consecutive quarter of year over year margin expansion," said Chief Executive David Sun.

Total operating costs and expenses, excluding special items, dropped to 89.6 percent from 91.5 percent a year ago.

Looking forward to the second quarter, the company expects revenues of 1.69 billion to 1.71 billion yuan. Analysts currently expect second-quarter revenues of 1.67 billion yuan.

HMIN closed Monday's trading at $27.95, up $0.97 or 3.60%, on the Nasdaq. The stock further gained $1.55 or 5.55% in after-hours trade.