KTHMANDU, MAY 19, 2012
With better days in both the capital market and tourism, hotel stocks might see brighter times in the capital market.
The market capitalisation of listed hotels has gone up by 20 per cent
in the last one year. Though the hotel industry is considered to be
promising with a bright future due to the budding tourism sector in the
country, listed hotels are not faring well at the stock market.
According to recently published unaudited financials, the three
hotels — out of four listed — have registered seven per cent growth in
profits in third quarter of current fiscal year.
Soaltee Hotel has posted Rs 120 million, Taragaon Regency Hotel
registered Rs 100.8 million and Oriental Hotels recorded Rs 83.9 million
as net profits in the third quarter of current fiscal year. Hotel Yak
and Yeti, which has applied for de-listing, has stopped publishing its
quarterly and annual financial reports.
The index of hotels subgroup — among the nine sub groups at Nepse
––has registered only seven per cent growth since the beginning of the
fiscal year. The recent surge in the capital market is yet to spill over
to hotels, though they are sailing smooth due to rising tourist
arrivals in the last two years.
Only stock prices of financial institutions and hydropower companies
have witnessed a surge but shares of hotels, manufacturing and trading
companies are still struggling.
Tourism industry in Nepal has been registering around a 20 per cent
growth rate on average annually making it one of the most profitable
businesses. But stocks belonging to hotels are not traded frequently and
have not seen much price appreciation, though Soaltee Hotel’s bonus
shares have contributed a little in increasing the market capitalisation
of the subgroup.
In the last half year, only 20,489 unit shares worth Rs 2.26 million
belonging to the three hotels were traded, which is less than the
turnover of Nepal Telecom (NT) on an average day.
Despite nine five-star hotels and around 25 hotels ranging from
three-stars that are eligible for public offering, only four are listed
at the stock exchange.
“There is no obligation for hotels to issue shares to public, so it
is up to them, if they want to issue shares to public to raise funds or
not,” pointed out share analyst Rabindra Bhattarai.
At Nepse, some 65 per cent of the total stocks listed belong to
financial intermediaries and NT’s shares consist of 10 per cent of total
listed shares, leaving marginal room for any other company. “The market
needs to be diversified so that different types of companies get listed
which can then help investors distribute their risks by managing their
portfolio,” he said.
