Amara Holdings Ltd (SGX: A34) had released its fiscal first-quarter earnings on Wednesday.
The company may not be a very well-known property outfit in Singapore, but it does own some prime real estate here.
For example, Amara’s the operator and owner of the upscale Amara Singapore hotel in Tanjong Pagar, Singapore. And just beside the hotel sits 100AM, a retail mall that’s owned by Amara Holdings too. The company’s also the operator of Amara Sanctuary Resort, a boutique resort situated in Sentosa Island, one of Singapore’s main tourist destinations.
In addition to all that, Amara Holdings also has other real estate related investments in other parts of Asia.
With these as a backdrop, let’s dig into the company’s latest earnings release.
For the quarter, Amara Holdings saw a strong 33% spike in revenue to S$24 million when pitted against the same quarter a year ago. This was due to higher rental income and the sale of a larger number of development property during the quarter. The company also experienced an increase in revenue from its hotel investment and management segment.
But, due to higher expenses such as staff costs with the new soft opening of its Bangkok hotel, Amara Holdings’ profit before tax only managed to increase by 10% year on year to S$4.8 million. At the end, the company’s net income only climbed by 8% from a year ago to S$3.66 million.
Moving on to Amara Holdings’ financial health, the company’s net debt to equity ratio (where net debt refers to total borrowings minus total cash) came in at 72.7% as at 31 March 2015, up from 70.9% a year ago. From this, we can see that Amara Holdings’ balance sheet has weakened slightly.
Although the net debt to equity ratio seems rather high at the moment, it’s good to note that most of the debt is backed by the company’s investment properties that can produce relatively stable recurring income.
Since Amara Holdings is an asset owner, its book value (total assets minus total liabilities) can serve as a proxy for its real economic worth and investors might thus want to pay attention to that figure. The company ended the quarter with a book value per share of 59.97 Singapore cents, up 12.1% from the selfsame figure of 53.48 Singapore cents seen a year ago.
A future outlook
Amara Holdings’ management stated in the earnings release that the hospitality sector in Singapore is expected to remain challenging going forward due to the large amount of additional room supply coming online this year. However, the government is actively looking for ways to increase visitor arrivals into Singapore and that may help mitigate some of the negative impact from the growing supply.
As for the new Amara Bangkok Hotel which was opened earlier this year, management is optimistic that it will provide Amara Holdings with a new diversified income stream.
All told, Amara Holdings is an asset-rich company with a net asset value of S$345.5 million. The company’s currently trading at a price to book value of 0.9 times and provides a yield of 1.8%.
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