Stock Commentary                                                                                 Date: 10/01/2017

Stock:                                                     Miramar Hotel

Closing price:                                       $16.38 (10/01/2017)

52 weeks range:                                   $11.74 – 18.54

Shares outstanding:                             577,512,434

Market Capitalisation (H Shares):       HK$ 9,460,066,445 (10/01/2017)

Target Price (12 months):                    Neutral

Summary :

Miramar Hotel & Investment Co. Ltd. is a group that run a diversified portfolio of serviced oriented business. The portfolio comprised of hotels and serviced apartments, property rental, food and beverage as well as travel services in Hong Kong and Mainland China. The current price multiple of the stock is 6.9 times, while the annual yield return is 3.3% (based on the 2015 EPS). Business of the group is stable and offered a steady return to investors. Also, the Chairman of Henderson land (0012.HK) increased its holding for the past year. Such action stablised the price of the stock. On the other hand, the group is conservative in its pursuit of new area of business as well as expand to other part of Asia. I expect the stock will trade within the 16-17 dollar range, given the fact that the Chairman of Henderson land kept buying the shares of this company and offered a strong backing to the price of the stock.

Overview – Half Yearly 2016 :

1. The group operated 2 hotels in Hong Kong, The Mira Hong Kong and Mira Moon. The Mira Hong Kong was re-branded in 2008, prior to the period mentioned, it was known as Miramar Hotel. The Hotel was first launched in 1966 and first one that joined the international hotel network. The hotel group went public in 1970. The group later acquired by Henderson Land Group in 1993 and in 2002 diversified its business into different segment, ie Travel, Property Investment and Food and Beverage. The group later launched its second hotel, Mira Moon, in Causeway Bay, Hong Kong. The Hotels and serviced apartments segment of the group's business contributed around 20% to its total revenue. The interim report of 2016 showed a 7% decline with this segment from HK$327,836,000 to HK$304,390,000 in comparison to the same period last year. The management highlighted the difficulty facing the Hotel business in Hong Kong; the report mentioned that the average achieved room rate of all hotels in Hong Kong during the reporting period declined 5.8% and the occupancy rate declined 1 percentage point.
2. The Travel operation is one of the main revenue driver of the group's business. The group entered into a purchase agreement with Hong Kong Ferry (Holdings) Company Limited (0050.HK) to acquire HYFCO travel agency in July last year. The acquistion further strengthened the group's existing travel business. According to their half yearly report of 2016, the revenue genearted in Travel operation was HK$ 538,509,000, down approximately 11% in comparison to last year.
3. Property rental was the second largest contributor to the group's revenue. According to the 2015 annual report, the group held 13 properties throughtout Hong Kong and China. These properties were composed of commerical, residental as well as car park; the majority of these properties were commerical. According to the half yearly report of 2016, the revenue from properties rental was HK$421,786,000, up around 3% in comparison to the same period last year. This component of the group's business contributed a stable income.
4. The last segment of the group's main business is Food and Beverage. Although this segment did not contribute as much as the other operations, Food and Beverage is an important intergral to the group's overall business as well as complement to their group's Hotel as well as commerical properties operation. The group continued to run one of the most popular Cantonese restaurant chain brand, “Tsui Hang Village” and opened a third resturant in Causeway Bay in May 2013 and it started off with a new Korean restaurant, “School Food” and made its debut in August 2013. The success with the new brand strengthened their confidence further and the group opened five more resturants under the “School Food” between 2013 to 2015. The revenue from this segment was HK$ 221,372,000 in the half yearly report of 2016, up approximately 3% comparing to the same period last year.

SWOT ANALYSIS:

Strength :

1. One of the most world know Hotel brand in Hong Kong. The Mira Mall was one of the most popular mall in Kowloon district.
2. Apart from Hotel operation, the group diversified its business into Food and Beverage, Travel as well as property rental. The diverisfication enable the group to utilise its resources fully; while each operation can complement each other.
3. The group held various properties in prime location throughout Hong Kong as well as China. These properties had increased value over the years and offered a stable rental income.

Weakness :

1. The group is conservative and slow in expanding its business to other part of Asia.
2. Largest income came from Hong Kong; if the economy slow down in Hong Kong, it may hurt all the group's operations.

Opportunities :

1. Food and Beverage – the group had been successful with its dining brand and they might seek further opportunities to expand this part of operation by introducing more popular dining brand from other parts of the world.
2. Travel Operation – recent acquistion of the Travel business from Hong Kong Ferry (Holdings) Company Limited (0050.HK) would give the group more resources to expand its existing business and capture other opportunities.
3. The chairman of Henderson land (0012.HK) increased the holding of Miramar Hotel over the past year.

Threat :

1. Economic downturn worldwide and in China may deter people from travelling and spending.
2. Slowdown in Hong Kong economy may hurt the group's overall business

「註：本人倪國權為證監會持牌人士。截至本評論文章發表日止，本人及/或其有聯繫者並無持有全部提及之証券的所有相關財務權益。」; Or
” I, Ni Kwok Kuen Alex, am a licensed person under the Securities and Futures Commission. Until the date this commentary was published, neither I and/or my affiliates are the beneficiary of the securities mentioned herein or are entitled to any financial interests in relation thereto. “