Hotel Properties Limited (HPL): FY2025 Financial Performance Review

Hotel Properties Limited (HPL), a Singapore-listed hospitality and property group, released its condensed interim financial statements for the six months and full year ended December 31, 2025. Below, we analyze key financial metrics, performance trends, exceptional items, and notable events influencing the company’s outlook.

Key Financial Metrics and Comparative Performance

Full Year Comparison:

Historical Performance Trends

While revenue and gross profit increased YoY, the Group swung from a net profit in FY2024 to a significant net loss in FY2025, primarily due to:

• Increased administrative expenses following the opening of new hotels (Four Seasons Hotel Osaka and The Boathouse Pulau Tioman).
• Higher finance costs due to additional borrowings.
• A \$16.3 million mark-to-market fair value loss on long-term investments, compared to \$1.5 million in FY2024.
• Absence of non-recurring profit from Brillia Tower Dojima residential apartments (which contributed \$38.7 million in FY2024).
• Decrease in share of losses from associates and jointly controlled entities, mainly due to a favorable settlement at Paddington Square, London.

Dividends

The Board recommended a first and final one-tier tax exempt dividend of 4 cents per share, a reduction from last year’s total (4 cents plus a 2-cent special dividend).

Exceptional Earnings and Expenses

• FY2025 included a significant fair value gain of \$31.4 million on investment properties, though this was lower than the previous year’s \$96.6 million gain.
• Exceptional items in FY2024 included the Brillia Tower Dojima profit (\$38.7 million), which did not recur in FY2025.
• Non-recurring gains or losses from associates and joint ventures have also impacted results in both years.

Corporate Actions and Notable Events

• Asset Acquisition: Post year-end, HPL completed the purchase of The Intercontinental Auckland for NZD184 million (SGD140.9 million).
• Share Capital: 2,100,000 new shares issued in 2H2025 under the Employee Share Option Scheme, diluting existing shareholders slightly but supporting talent retention.
• Debt Management: Short-term borrowings decreased due to repayment of notes, while long-term borrowings increased following new notes issued.
• Related Party Transactions: \$20.6 million invested in associates/joint ventures in which directors/substantial shareholders have interests.

Macroeconomic and Industry Trends

The report notes a positive tourism outlook, with international arrivals up 4% in 2025. However, risks remain from geopolitical instability, volatile interest rates, and elevated inflation in tourism-related services, which could weigh on future performance.

Events That Could Affect the Business

• Uncertainty from geopolitical risks, ongoing conflicts, trade tensions, economic slowdowns, and extreme weather events could undermine consumer confidence and the hospitality/property market.
• No mention of legal disputes or policy changes directly impacting HPL in the reporting period.

Forecast and Outlook

Management expects continued revenue growth from new hotel openings and improved tourist arrivals, but remains cautious due to global uncertainties. The tone of the commentary is neutral to cautious, reflecting concern over macroeconomic headwinds despite industry recovery.

Conclusion and Investor Recommendations

Overall, HPL’s performance in FY2025 is weak, despite revenue growth: Gross profit improved, but net losses widened significantly due to higher expenses, increased finance costs, absence of exceptional gains, and fair value losses. The reduction in dividend further signals conservative capital management and caution regarding future earnings.

Investor Recommendations

• If you currently hold HPL stock: Consider maintaining a close watch. The company is not in a strong earnings position, but is investing in growth and asset expansion. Unless you need immediate yield or capital gains, holding may be justified if you are comfortable with risk and believe in a tourism recovery. However, reassess if net losses persist beyond FY2026 and if macroeconomic risks escalate.
• If you do not hold HPL stock: Exercise caution before initiating a position. Wait for clearer signs of profitability recovery, stabilization in finance costs, and evidence that new assets contribute meaningfully to earnings. The dividend yield is reduced and the outlook is uncertain, so entry may be more attractive once earnings turn positive or risks abate.

Disclaimer: This article is based strictly on the company’s financial report and does not constitute investment advice. Please conduct your own due diligence and consider your risk tolerance before making any investment decisions.

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