Miramar Hotel & Investment Co. Ltd (Miramar) (HKG:0071) is a corporation that is involved in hotels, serviced apartments, retail malls, offices, operations of food and beverage (F&B) outlets, and provision of travel services in both Hong Kong and Mainland China. Listed on the Hong Kong Stock Exchange, Miramar is worth HK$ 10.29 billion in market capitalisation as at 22 August 2019. 

In this article, I’ll cover on its latest financial results and valuation figures. Thus, here are 13 things to know about Miramar before you invest: 

  • Segment 1: Hotels and Serviced Apartments

    It derives income from two hotels: The Mira Hong Kong and Mira Moon located in Hong Kong and Miramar Apartment located in Shanghai. This division has increased its revenues from HK$ 429 million in 2010 to HK$ 710 million in 2018. It is due to strong occupancy rates obtained for the two hotels in Hong Kong during the period.


    Source: Miramar’s Annual Reports

  • Segment 2: Property Rental

    It derives rental income from Mira Place, which covers 2.0 million sq. ft. of retail spaces, Grade-A office spaces, and The Mira Hong Kong (stated above) all under one roof. This division has attained growth in revenues for the last nine years. It increased from HK$ 494 million in 2010 to HK$ 914 million in 2018. This is due to strong occupancy rates, higher rental income from both asset enhancement works and rental reversions over the last nine years.


    Source: Miramar’s Annual Reports

  • Segment 3: F&B Outlets

    Miramar has a diversified portfolio of F&B outlets which serve a diverse group of diners in Hong Kong. These brands include Cuisine Cuisine, the French Window, the Champagne Bar, Room One – Sports Bar, Nooodies,
    Supergiant Tapas and Cocktail Bar, Yamm, Yibes, COCO, Whisk, and also the Assaggio Trattoria Italiana. F&B revenues began to fall in 2016 after hitting its peak of HK$ 451 million in 2015. This is due to the company’s decision to revamp certain F&B brands to reduce operating inefficiency beginning in 2017.

    Source: Miramar’s Annual Reports

  • Segment 4: Travel Services

    It includes provision of worldwide travels, air travel and hotel bookings, cruise holidays, space travel under Virgin Galactic, car rentals and short haul tours and trips to Macao and Mainland China. Sales were stable as it has contributed HK$ 1.2 billion in revenues per year to Miramar since 2013.


Source: Miramar’s Annual Reports

  • Investment Properties

    Miramar has achieved a CAGR of 6.9% in its valuation of its investment properties. It increased from HK$ 8.7 billion in 2010 to HK$ 14.9 billion in 2018.


Source: Miramar’s Annual Reports

  • Group Revenues:

    Miramar’s group revenues have been relatively flat, maintaining at HK$ 3.0 – 3.2 billion per annum. This is because the growth in sales from the hotel and serviced apartments division and property rental division had been offsetted by sales decline from its F&B outlets.


Source: Miramar’s Annual Reports

  • Underlying Profits

    Underlying profits is used as it excludes fair value gains or losses on the company’s investment properties. It enables us to evaluate its business performance better.

    Its underlying profits had grown by a CAGR of 10.30% for the past eight years from HK$ 378 million in 2010 to HK$ 828 million in 2018. It is due to higher profits generated by hotel & serviced apartments division and property rental division during the period. They command higher profit margins than its F&B outlets and travel division.

    Miramar had achieved a 9-Year Return on Equity (ROE) of 4.29% a year. It means, the company has made, on average, HK$ 4.29 in earnings per annum from every HK$ 100 in shareholders’ equity from 2010 to 2018.


Source: Miramar’s Annual Reports

  • Cash Flow Management

    From 2010 to 2018, Miramar has generated:

    – HK$ 6.45 billion in cash flows from operations.
    – HK$ 378.4 million in interest income.
    – HK$ 23.0 million in dividend income.
    – and raised another HK$ 1.54 billion in net equities.


    Out of which, it has spent on:

    – HK$ 990.0 million in net capital expenditures (CAPEX).
    – HK$ 156.8 million in net acquisition of investment properties.
    – HK$ 858.6 million in repayment of net long-term borrowings.
    – HK$ 2.53 billion in dividends to existing shareholders.
    – HK$ 150.1 million in dividends to non-controlling interests.


    It has increased its cash reserves from HK$ 441.8 million in 2010 to HK$ 3.30 billion in 2019. Evidently, Miramar is a cash-cow and has chosen to split its cash proceeds 50:50 to invest in CAPEX to growth in profits and to reward its shareholders with consistent dividend payments.

     

  • Balance Sheet Strength
    As of 31 December 2018, Miramar has a net cash of HK$ 4.7 billion and
    total equity of HK$ 19.0 billion. Thus, it has no net debt-to-equity ratio.
     
  • Major Shareholders

    Miramar is a member of Henderson Land Group, which owns a total of 48.9% shareholdings in the company. Dr. Lee Shau Kee sits in the board as a non-executive director. His son, Lee Ka Shing is made the Chairman & CEO of the company.

     

  • P/E Ratio

    As of 13 August 2019, Miramar is trading at HK$ 14.96 a share. Thus, its current P/E Ratio is 12.47, calculated based on its underlying profits per share of HK$ 1.20 in 2018, slightly below its 9-year average of 13.21.


  • P/B Ratio

    As of 31 December 2018, Miramar has net assets of HK$ 27.54 a share. Thus, its current P/B Ratio is 0.54, just below its 9-year average of 0.56. 


  • Dividend Yields

    In 2018, Miramar has paid out HK$ 0.61 in dividends per share (DPS). It is a continuous growth in DPS from HK$ 0.31 in 2010. Thus, its dividend yield is 4.08% per annum, slightly above its 9-year average of 3.99% per annum.


Source: Miramar’s Annual Reports


VIA’s Verdict 

Overall, Miramar has delivered sustainable growth in revenues, profits, and as well as dividend payments to its shareholders. This has contributed to a stable growth in its stock price, lifting its market capitalisation from HK$ 5.2 billion in 2010 to HK$ 10.3 billion presently. 

Presently, it is trading close to its long-term valuation averages and is offering a dividend yield of 4.08% per annum. 

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