Why Mantra Group Ltd share price is in the buy zone?

Commonwealth Games are expected to be positive for the group: The website conversion figures since the launch of Mantra+ are tracking above forecast with 10% conversion of the database. 1,000,000 guests in marketing database have so far converted 100,000 to Mantra+ members with on-boarding strategy in place. Moreover, MantraHotels.com was launched in July and the booking engine has been due for release in June 2017. This is the consolidated, ‘mobile first’ distribution platform for all Mantra Group brands and territories, which has the personalization capability. On the other side, the Commonwealth Games that is scheduled for April 2018, will see participation from 6,600 athletes and team officials from 70 nations, and this 11-days sporting and cultural event is expected to be positive for the group. This will be the largest sporting event that Australia will see this decade and is estimated to have a $2 billion of economic impact. Moreover, there will be 17 competition venues consisting of 18 sports and 7 para-sports while over 1.5m spectators are expected. The group would largely benefit as it is the largest accommodation provider on the Gold Coast. Meanwhile, the group has completed 1,138 accommodation refurbishments this year to date (YTD). 10 hotel projects including 2 restaurants and 7 foyers are completed YTD. The 18 foyer and hotel guest spaces are currently underway and 5 major projects are to be completed in FY17.

Strong first half of 2017 Financial Performance: The group had reported 15.1% growth in the underlying Net Profit after Tax (NPAT) at $31.8m in the first half for the period ended December 31, 2016. The total revenue grew by 15.9% to $356.2m and underlying EBITDAI grew 10.3% to $58.7m. Further, the business has performed strongly in H1FY2017 due to the strength of resorts and acquisitions more than offsetting softness in CBD. Moreover, the strong revenue growth is due to the four property acquisitions completed in the period (increase of $27.9m) and due to the organic growth (increase of $20.9m).However, the Underlying EBITDAI margin has decreased from 17.3% to 16.5% due to ARR decrease in CBD and there was continued strong Asian inbound trends.    

 

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