AMTD Research | Far East Consortium (35.HK): Emerging from the Eye of the Storm, Maintain Buy

We have published a research report on Far East Consortium (35.HK, Buy) on the back of its interim results announcement.  Please find our full report attached.   We believe FEC is emerging from the eye of the COVID-19 storm, and potential earnings upside surprise could come from its Hotel Operations if COVID-19 improves.  Maintain Buy.

Key Highlights

• We believe that FEC is emerging from the Eye of the COVID-19 Storm and we believe FEC is on track to deliver a 17.2% YoY Net Profit Growth in FY2021E.
• If the COVID-19 situation improves, we believe there would be potential upside to our earnings estimate as Hotels RevPAR could drive an upward swing.
• Hotel Occupancy Rates across its global hotel portfolio have already improved back to 65% in Sep 2020 (from 41% in April 2020), while Hong Kong Hotel Occupancy rates have even reached 82.4% in Sep 2020
• FEC’s 1HFY2021 core net profit came in at HK$517m, which implies ~52% of our full year FY2021E Net Profit achieved.
• Stock is on track to offer a 9.2% FY2021E div yield and is trading at an attractive 66% disc. to NAV, 5.6x FY2021E P/E.  Maintain Buy.