In this briefing:
- China Tobacco Intl (HK) IPO: Proxy For the Chinese Cigarette Consumption
- New Century Hotel (浙江開元酒店) IPO Review – Higher ADR and RevPAR than Peers but Margins Fall Short
1. China Tobacco Intl (HK) IPO: Proxy For the Chinese Cigarette Consumption
China Tobacco International (Hong Kong), a subsidiary of the China Tobacco International, is seeking a listing in Hong Kong. Per media reports, the company plans to raise USD 100 million. In this insight, we will discuss the following topics:
- What does China Tobacco International do?
- What is its relationship with China Tobacco?
- How did its different segments perform?
- The industrial backdrop
2. New Century Hotel (浙江開元酒店) IPO Review – Higher ADR and RevPAR than Peers but Margins Fall Short
Zhejiang New Century Hotel Management Group (1158 HK) (NCH) is looking to raise up to US$179m in its upcoming IPO.
NCH is riddled with related party transactions, from the sales of consumer goods, carpets and wine to having 24% of its hotel management revenue come from related parties. There had been a handful of small acquisitions and disposals but it all seemed to be just reshuffling of assets between NCH and the controlling shareholder with no clear strategy.
Key metrics show that even though NCH is operating at higher ADR and RevPAR compared to peers, it ultimately falls short in terms of EBITDA and net margins. It also has the lowest occupancy rate.
In this insight, we will focus on corporate governance issues, peer metric comparison, and relative valuation with listed hotel operators.
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