Millennium & Copthorne Hotels Share Price (MLC)

"Our operating strategy was consistent with previous years, with sales teams focused on achieving an optimal balance between occupancy and average room rate across the estate. "Management continued to achieve good levels of profitability despite a more challenging trading environment in the second half of 2012, with some regions seeing signs of economic uncertainty affecting personal and corporate hospitality budgets. Our consolidated hotel gross operating profit margin for the year was 38.5% (2011: 38.7%)."

Total full year revenue at Millenium & Copthorne Hotels declined by 6.4 per cent despite an increase in revenue per available room (RevPAR). Total revenue fell from £820.5m to £768.3m, while RevPAR on a constant currency basis rose 3.9% from £64.81 to £67.32. Revenue from hotels only dropped 2.1%, while headline operating profit slid 14.7% to £163.3m. Headline profit before tax declined 14.6% to £157.7m. However, the dividend was increased to 13.59p from 12.50p a year earlier. The group's Chairman gave an upbeat statement, saying: "The group increased RevPAR, kept firm control of costs and strengthened its financial position in 2012. Revenue and headline pre-tax profit increased on a like-for-like, constant currency basis, and our hotels achieved good operating profit margins. "Our asset management programme is building momentum and laying a strong foundation for future growth, supported by further strengthening of the management team.

Millennium & Copthorne Hotels: Liberum Capital starts with a target price of 469p and a hold recommendation.

Credit Suisse has downgraded hotel group Millennium & Copthorne (M&C) from 'outperform' to 'neutral' given only seven per cent upside to its 546p target price. The company's third-quarter results announced last week may have been in line with expectations but Credit Suisse said there is "evidence of slowing Asian RevPAR and a lack of near-term positive earnings catalysts with refurb spend only benefitting from late 2014." Asian RevPAR (revenue per available room) accounted for 54% of group earnings before interest and tax (EBIT) in 2011. The broker highlights three short-term risks and three longer-term positives. Risks: "1) slower Asian RevPAR and high Singapore supply growth in 2013; 2) signs of M&C underperformance in US/NY/RoE; and 3) lack of investment in weaker trading regions." Positives: "1) the upside from £240m of refurb capex could be worth 15-20% to profit before tax but is unlikely to benefit financials until H2 2014; 2) disposals/asset restructuring remain possible but visibility is low and 3) M&C has a c5,000 room pipeline but we estimate it adds only 0.4% to annual EBIT growth." Credit Suisse says that with trading risks increasing and little scope for a near-term positive EPS surprise, it is now more cautious on the prospects for M&C.

Credit Suisse has downgraded hotel group Millennium & Copthorne (M&C) from 'outperform' to 'neutral' given only 7% upside to its 546p target price. The company's third-quarter results announced last week may have been in line with expectations but Credit Suisse said there is "evidence of slowing Asian RevPAR and a lack of near-term positive earnings catalysts with refurb spend only benefitting from late 2014."

Millennium & Copthorne: Credit Suisse downgrades to neutral.