To recap, Amara’s 1H18 earnings accounted for 26% of its full-year net profit estimate, while 2Q18 revenue was up 30% y-o-y. The Shanghai hotel operation was a contributing factor, as seen in the higher revenue from the hotel investment & management and property investment & development businesses.
In a Tuesday report, analyst Leng Seng Choon expects a stronger 2H18 earnings on stronger contributions from Amara’s Singapore hotel operations, as well as more stabilised operations from Amara Signature Shanghai. The soft launch for 100 AM Shanghai – scheduled for end 2018 – should also contribute to 2018’s revenue.
“However, given the slight delay vs our previous assumption, we cut 2018-2019 net profits by 11% and 12%,” says Leng.
There could also be some contributions from its Singapore property development projects. Since May, Amara has been actively marketing the balance of its 33-unit M5 @ Jalan Mutiara which gained its temporary occupation permit in 1Q18.
Management hopes to launch its 56-unit Newton Road residential development by end 2018 although the government’s property cooling measures could possibly dampen sales over the short term.
“Our forecast of y-o-y weaker 2018 turnover is mainly due to expectations of lower fair value gains for investment properties,” says Leng.
RHB is maintaining its “buy” and 88 cents target price at 35% discount to RNAV.
As at 3.41pm, shares in Amara are up 0.5 cent at 48 cents.
