City Lodge shares surge after it releases trading statement
January 28, 2005
By Dirk De Vynck
Cape Town - Listed hotel group City Lodge`s share price yesterday rose by almost 5 percent after the group`s trading statement for the first half of its financial year came out above analysts` predictions.
The share price closed R1.55 firmer at R35.50, while the leisure and hotel sector increased 0.92 percent.
The group said its fully diluted headline earnings and basic earnings per share for the six months to December would be between 20 percent and 25 percent higher.
Although analysts do not normally do projections on the interim performance, the trading statement showed that the full-year performance could exceed predictions.
Analysts have forecast that full-year headline earnings would rise 14 percent to R2.73.
In the the last financial year, the second half`s headline earnings exceeded those of the first half.
Abri du Plessis, an analyst at Gryphon Asset Management, said he suspected that City Lodge might have had better trading over the weekends, boosted by increased international tourist activity.
The strength of the rand meant that foreign visitors got less for their currency, which could have led them trading down hotel accommodation.
Nesi Chetty, an investment analyst at RMB Asset Management, said the better-than-expected trading statement was despite higher input costs and the hotel group`s increased spend on marketing.
Du Plessis said the only real way for City Lodge to grow was by opening new hotels as it would be very difficult to lift occupancy rates much higher from their already high levels.
But Chetty said it was not always so easy to find locations for new hotels, while increasing property values and building costs were also putting pressure on input costs.
The City Lodge group trades through Courtyard Hotels, City Lodge, Town Lodge and Road Lodge.
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