In morning trade the Mantra Group Ltd (ASX: MTR) share price has tumbled 5% to $2.77 following the release of its full-year results.
Key takeaways from the release include:
- Revenue of $689 million, up 13.7% on FY 2016.
- Underlying EBITDAI increased 12.7% to $101.2 million.
- Statutory net profit after tax increased 22.7% to $45.6 million.
- Underlying NPATA increased 13.3% to $49.9 million.
- Statutory basic EPS of 15.3 cents per share.
- Fully franked final dividend of 6 cents per share, bringing the total dividend for the year to 11 cents per share.
- Outlook: Underlying EBITDAI of between $107 million and $115 million in constant currency terms.
The star of the show for Mantra in FY 2017 was undoubtedly its Resorts segment. That segment delivered EBITDAI of $45.6 million on revenue of $316.2 million, representing growth of 31% and 29.5% on FY 2016.
A key driver of this growth was the contribution of three new resorts. These were Ala Moana Hotel by Mantra in Hawaii, Mantra Residences at Southport Central on the Gold Coast, and Mantra the Observatory at Port Macquarie. These three new properties contributed $59.2 million in revenue and $9.1 million in EBITDAI during the period.
Furthermore, the segment was given a boost from increased occupancy and average room rates. This was the result of strong short-term domestic and international travel demand, particularly from the corporate and Asian inbound markets.
Mantra's CBD segment posted a 1.5% increase in underlying EBITDAI to $46.7 million. The company had a strong year in the Sydney, Melbourne, Canberra, and Tasmania markets, helping to offset declines in other regions.
Finally, the Central Revenue and Distribution segment saw revenue increase 10.3% to $47.4 million and underlying EBITDAI increase 5.4% to $35.3 million. This was driven by higher bookings through central distribution channels and additional management agreements.
Mantra declared a final fully franked dividend of 6 cents per share, bringing its full-year pay-out to 11 cents per share. Based on its current share price this provides investors with a trailing fully franked 4% dividend.
Should you invest?
Overall I thought this was a strong result from the leading accommodation provider. Perhaps the only disappointment and the reason for the share price decline today was its FY 2018 guidance.
Underlying EBITDAI of between $107 million and $115 million implies growth of 5.7% to 13.6% in FY 2018.
If Mantra delivers on the high end of its guidance range then I think it would be an absolute bargain buy, especially considering the tailwinds of the tourism boom that it and rival Event Hospitality and Entertainment Ltd (ASX: EVT) should experience for the next few years.
However, should EBITDAI only come in at the low end of its range then its shares arguably look fully valued now.
But ultimately I feel confident that the tourism boom will enable it to hit the high end of its guidance range, especially with the acquisition of the Art Series hotels.
So I would suggest investors consider snapping up shares on today's weakness with a long-term view.
