Kshs 000's | FY 2009 31-12-09 | FY 2010 31-12-10 | H1 2010 30-06-10 | H1 2011 30-06-11 |
Revenue | 3,889,365 | 4,462,614 | 1,785,452 | 2,113,639 |
Gross profit | 858,906 | 1,108,018 | 394,059 | 430,426 |
Gross Margin | 22% | 25% | 22% | 20% |
Profit before tax | 519,689 | 692,933 | 215,621 | 264,709 |
Net Margin | 13% | 16% | 12% | 13% |
Profit after tax | 380,362 | 516,384 | 142,178 | 185,671 |
Earnings per share | 3.32 | 4.39 | 0.96 | 1.36 |
Dividends per share | 1.25 | 1.25 | - | - |
Change from prior year | FY 2009 31-12-09 | FY 2010 31-12-10 | H1 2011 30-06-11 |
Revenue | 20% | 15% | 18% |
Gross profit | 24% | 29% | 9% |
Profit before tax | 57% | 33% | 23% |
Profit after tax | 70% | 36% | 31% |
Earnings per share | 58% | 32% | 42% |
Dividends per share | - | - | - |
Analysis:
TPSE revenues for the half year ended June 2011 rose by 18% compared to the same period in the prior year. Half year profits were up 31%.
TPSE’s overall performance has improved over the last 3 years, despite rising cost of operation arising from inflation in the region, as well the lingering effects of the global financial crisis and the impact it has had on the source markets for tourists.
The weakening shilling and huge increase in tourism numbers (media reports indicate that tourism arrivals are on course to surpass last year’s record) would likely translate into to a very strong half year performance.
The Ministry of Tourism launched a reclassification in March 2011 exercise based on the criteria laid out for the standardization of accommodation facilities. This means tourists will have access to more detailed information and thereby make informed choices about where to stay in East Africa. TPS Serena lodges and hotels are bound to benefit from the additional exposure.
While growth prospects for the company are good, the company faces significant threat from global hotel chains which are now eyeing East Africa: Marriot Hotels (one of the world’s most renowned hotel chains is constructing a hotel in Kigali, Rwanda that is scheduled to open in 2012).
TPS Serena’s trailing P/E is 13.21 based on the September 22 closing price; Kshs 58. While this is would be a good valuation in normal market conditions, the P/E is high compared to that of other stocks listed on the NSE most of which are currently trading at sub 10 P/E ratios.
