Stafford Hotels PLC net profits soar 203% to Rs. 31m in 2006/07

Stafford Hotels PLC, the owners of Dolphin Hotel has recorded the highest net profits from its inception with a pre tax profit of Rs. 40 million and net profit of Rs. 31.6 million during the financial year 2006/07.

According to the annual report for 2006/07 released recently the net profits recorded represents an unprecedented 203% growth compared to the net profit of Rs. 10.4 million recorded for the previous year. The pre tax profits of Rs. 40.1 million compared to Rs. 9.1 million for the previous year even recorded a bigger increase of 340%. The revenue for the period under review shows a growth of 40% at Rs. 266 million.

A spokesman for the hotel said the hotel which is owned and well managed by Hemas Group is a unique example where a hotel can perform exceptionally well despite the factors adverse to tourism in the country.

What is more significant is the fact that the hotel had maintained an occupancy rate of 80% compared to 36.2% recorded for the entire country. The company also owns Miami Beach Hotels Ltd. and Rainforest Ecolodge (Pvt) Ltd. which are 100% subsidiaries.

According to the Chairman's report the exceptional performance is due to the popularity of the hotel in the British market. Analysts expect a positive impact from the arrival of the England cricket team during the latter part of the year.

The present book value of the company is Rs. 17.50 on the basis of a revaluation done during 2004/05 and due to the escalation of land values in the past two years, the analysts said that the present actual book value is much higher.

The earnings per share on the basis of paid up capital of Rs. 316 is Re. 1 and the price earnings ratio 9.5 considering the market price of Rs. 9.50 on 29.6.07 is cheaper considering the PE of 19.1 for the hotel sector and overall PE of 12.39. The analysts said that the present price is highly undervalued and has potential for upward movement in the near to short term.