Hotel Royal Limited H1 2025 Results: Revenue Growth Amid Foreign Exchange Headwinds

Hotel Royal Limited, a Singapore-listed hospitality and investment group, has published its unaudited interim financial statements for the six months ended 30 June 2025. The results reflect both the company’s operational resilience and the impact of foreign exchange volatility. Below, we break down key financial metrics, trends, and outlook for investors.

Key Financial Metrics and YoY Performance

*Numbers marked with an asterisk are inferred or estimated based on available trends or annualized figures, as Q4 2024/H2 2024 exacts were not disclosed.

Performance Trends and Segment Analysis

• Revenue Growth: The Group’s revenue grew 8.6% YoY to \$35.33M, primarily driven by higher hotel room occupancy, higher room rates, and additional room inventory in Malaysia. Food and beverage revenue rose even more sharply by 21.1% YoY, while spa and car park revenues declined modestly.
• Profitability Headwinds: Profit after tax fell by 19.3% YoY, impacted by a swing from a \$1.5M foreign exchange gain last year to a \$212,000 loss this year. Adjusted for FX, underlying profit after tax actually improved by 53.5% (\$3.006M vs \$1.958M), reflecting robust core operations.
• Segment Results:
  • Hotel operations contributed \$6.16M net profit (down 15.5% YoY)
  • Property investments contributed \$0.91M (down 16.0% YoY)
  • Financial investments contributed \$0.15M (down 51.8% YoY)
• Cost Management: Cost of sales increased 8.5%, in line with revenue growth, and administrative expenses rose 12.3% due to wage pressures and full six-month operations for a hotel in Malaysia.
• Finance Costs: Fell 15.4% YoY due to lower interest rates and the Group’s variable-rate loan profile.
• Balance Sheet: Cash and bank balances declined to \$17.45M from \$19.56M, reflecting dividend payments and loan repayments. Net asset value per share remains strong at \$5.85.

Dividends

• No interim dividend is declared for H1 2025. This is in line with the Group’s practice of considering dividends on an annual basis. The final dividend for the previous financial year (FY2024) was \$3.266M.

Exceptional Items and Asset Valuations

• Foreign Exchange Impact: A significant swing from a \$1.5M FX gain in H1 2024 to a \$212K loss in H1 2025 was the key factor behind the lower reported profit. Excluding this, core profits improved.
• Asset Revaluation: No new revaluation movements were recognized in H1 2025. The Group continues to engage independent valuers for annual revaluations and interim reviews as needed. No delays or inconsistencies in process were noted.
• Impairments & Allowances: Only \$5,000 allowed for doubtful debts; no major impairments or exceptional expenses reported.

Cash Flows and Balance Sheet

• Operating Cash Flow: Increased to \$4.71M (up from \$2.35M YoY) due to stronger operating performance.
• Investing Cash Flow: Outflow of \$0.36M, mainly for renovations and property upgrades.
• Financing Cash Flow: Outflow of \$6.25M, reflecting dividend payments and net repayments of bank loans.
• Net Cash Position: Cash and equivalents at period-end stood at \$15.72M, down from \$17.81M at the start of the year.

Macroeconomic and Business Outlook

• Tourism Dynamics: Singapore saw a modest recovery in international visitor arrivals (+1.9% YTD), Malaysia showed early growth that cooled later, and Thailand saw a 6% YTD decline in arrivals.
• Management Outlook: The Group expects “moderate growth” for the second half of 2025, citing a “soft economic backdrop” with slower GDP growth, inflation, currency volatility, and reliance on intra-Asia travel.
• Strategy: Focus will remain on optimizing operational efficiency, revenue diversification, and strategic marketing to mitigate external risks.

Other Disclosures

• Divestments, IPOs, Fundraising: No such events reported this period.
• Legal, Regulatory, or Natural Disaster Events: No material events disclosed.
• Related-Party Transactions: No interested person transactions over \$100,000.
• Share Buybacks or Dilution: No share buybacks, placements, or mandates reported. No treasury shares outstanding.

Conclusion & Investment Recommendation

Overall Assessment: Hotel Royal Limited delivered solid operational growth in revenue and core profit, offset by negative foreign exchange swings. The underlying business, particularly hotels and food & beverage, is robust, and cost controls appear effective. However, macroeconomic risks—especially regional tourism volatility and currency fluctuations—remain a headwind.

For Existing Shareholders: The Group’s strong NAV per share, manageable leverage, and improving operational cash flows support a “hold” recommendation. Investors should monitor for any sustained FX losses or downturns in regional travel, but the steady dividend history and asset backing provide downside support in the medium term.

For Prospective Investors (Not Currently Holding): The stock may appeal to value-oriented investors seeking exposure to Asian hospitality and property assets, especially if FX headwinds abate. However, given the lack of interim dividend and ongoing macro uncertainty, entry is best suited for those with a longer-term horizon and risk tolerance for cyclical tourism trends.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should conduct their own due diligence and consider their risk profile before making investment decisions.

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