Citi lowers the target price for Shangri-La Asia to HKD 5.4 due to disappointing interim results

Citigroup's research report indicates that Shangri-La Asia (00069.HK) saw its core net profit decline by 13.8% year-on-year to USD 50.9 million in the first half of the year, primarily due to revenue growth falling short of expectations, adverse foreign exchange impacts, and changes in the fair value of investment properties. During the period, revenue only slightly increased by 0.7% year-on-year to USD 1.05 billion, affected by weak performance in the Chinese and Singapore markets; adjusted EBITDA decreased by 0.3% year-on-year, and the adjusted EBITDA margin fell by 0.2 percentage points to 23.8%. The company declared an interim dividend of HKD 0.05 per share, in line with market expectations.

The bank lowered its target price from HKD 6 to HKD 5.4, maintaining a "Buy" rating, and expects the company to gradually return to a normal growth trajectory, with global travel demand driving the development of its international hotel business, while its China operations may also benefit from the increase in inbound international travelers