Ikeja Hotel share price surged by 75%, despite 92.12% Q2 profit decline

Ikeja Hotel (owners of Sheraton Hotel) recorded a 75 per cent increase in its share price after topping the gainers’ table for two consecutive weeks.

The equity’s share price which closed at N1.52 for the week ended September 26, 2014 rose by N1.14 or 75 per cent; rising to N2.66.

Again, the Nigerian Stock Exchangebv (NSE) daily official list for the period ended Friday 10, 2014 showed that at N2.66, the stock is at its highest share price year to date (Year’s High), whereas the lowest share price year to date (Year’s Low) stood at 56 kobo.

This rally on the stock seem to be unconnected with the company’s second quarter (Q2) result for the period ended June 30, 2014, where most of the key indices closed in red.

According to the result, suffered a loss after tax of N485.43 million or 92.12 per cent from the N527.29 million that was recorded in the corresponding period of 2013 down to N41.56 million.

Profit before tax for the period suffered a retrogression of 94.64 per cent to N41.56 million from the N775.43 million that was recorded the prior year.

The company’s turnover dipped further to N2.73 billion from the N3.21 billion that was earned a year earlier; indicating a N476.97 million or 14.87 per cent increase over the period.

More so, gross operating profit closed lower at N1.57 billion from the N2.01 billion that was recorded the erstwhile year.

Total liabilities closed a little higher at N10.12 billion from the N9.77 billion recorded the prior year.

Total assets inched to N17.45 billion from the N17.14 billion, whereas total equity followed the same pattern closing at N7.33 billion from the N7.37 billion that recorded the erstwhile year.

Analysts are of the view that share price, which ordinarily should be retarding due to the poor performance, in its result, could be reacting to information, is appealing to investors or bargain hunters.

It was recently reported that the global hospitality giant, Starwood Group, is set to invest $500 million in Nigeria’s hospitality industry, with the planned addition of five new hotels to be completed by 2017.

This was revealed in a monthly report by financial services firm, Financial Derivatives Company (FDC), presented at the Lagos Business School’s executive breakfast meeting by Bismarck Rewane, Managing Director/Chief Executive Officer of FDC.

According to him, the hotel and leisure company intends to add between 700 to 1,000 hotel rooms in the new hotels, which will include the four points by Sheraton in Ikot Ekpene, Akwa Ibom State, Southern Nigeria, expected to be completed in 2015.

Others are four points by Sheraton in Benin City, Ikeja and Ibadan. The fifth hotel in the new investment plan will be the Le Meridien, Ikoyi. 

Source : Tribune

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