Mantra of expansion gains pace
MANTRA Group is cashed-up and on the hunt for extra properties.
The Surfers Paradise-based hotel and resorts operator has a solid pipeline of international and domestic opportunities, Mantra boss Bob East says.
Australia’s second-largest hotel operator posted a net profit of $31.8 million, up 15.1 per cent, and underlying net profit after tax and amortisation of $33.1 million, up 14.4 per cent, thanks to an almost 30 per cent surge in the booming resorts sector.
But the strong result was dragged down by a slowing CBD sector, in particular the mining-affected cities of Brisbane, Perth and Darwin, overall down 3.4 per cent.
The result was slightly down on analysts’ expectations, missing consensus by around 3 per cent.
Hunter Green’s Charlie Green said most of Mantra’s growth was coming from acquisitions.
However, he was encouraged the group reaffirmed fullyear guidance.
“Steady as she goes seems to be the approach,” he said.
Mr East said the Gold Coast, far north Queensland and Queenstown were star performers for the group, with revenue growth in each running at almost double-digit figures.
“In resorts, the Gold Coast is performing extremely well and we are incredibly well-positioned (there) to take advantage of the massive inbound tourism growth,” he said.
“With (the growth of) the movies business and the Commonwealth Games on the horizon ... I have a strong conviction that the strong demand will continue.”
Mr East said the CBD sector had been hit by a slowdown in room rate revenue.
He said Mantra, which added four new hotels in the half, was “constantly on the hunt for new properties”.
“Our balance sheet is strong, we’re well within debt covenants and we have good headroom to capitalise on new acquisitions,” Mr East said.
“We’re continually assessing acquisitions, we’re seeing good opportunities in the marketplace and we have the firepower to capitalise on those.”
Mantra is eyeing international hotels in Hawaii after the success of its 1176-room Ala Moana hotel.
“We’re very keen on it (Hawaii),” Mr East said.
“There is absolutely no doubt there is opportunity to continue to explore that market.
“We will continue to pursue opportunities in that space, no doubt.”
He said Mantra’s Singapore office was “getting some activity, but we’re focusing on bigger deals there, we’re not interested in smaller deals”.
However, domestic acquisitions, particularly on the Gold Coast, remained the group’s main focus.
Quizzed on the impact of the October tragedy at Ardent Leisure’s Dreamworld theme park, in which four people died, Mr East said Mantra had not noticed an impact, particularly in the critical January trading period.
“It is hard to identify whether it has impacted (on revenue),” he said.
“Anecdotally, you might suspect to see some softening but we haven’t experienced that.”
He said lack of supply was the biggest issue for the acquisition-hungry group.
Brisbane and Perth have strong new supply but the Gold Coast has “very few” builds on the horizon and Cairns has “zero”.
Mantra reaffirmed full-year guidance for underlying earnings of $101 million to $107 million and net profit of $48.5 million to $52.5 million.
It declared a fully franked dividend of 5¢ a share.
Its shares closed 17¢, or 5.63 per cent, lower at $2.85.