Transcorp Hotels: Improved Fundamentals Propel Stock Price 

Kayode Tokede 

The stock price of Transcorp Hotels Plc gathered momentum in the first half (H1) of 2023 following the company’s growing fundamentals that have continued to attract domestic and foreign investors’ interest.  

The hospitality business segment of Transcorp Corporation in H1 2023 saw its stock price increase to N23.40 per share, an increase of 274.4 per cent from N6.25 per share it closed in 2022 despite a difficult operating environment in the first quarter (Q1) ended March 31, 2023.

At N23.40 per share, the stock price of Transcorp reached 52-week high as of June 27, 2023, attributable to investors increasing buy-interest.

The market capitalisation of Transcorp Hotels has risen to N239.68billion as of June 27, 2023 from N64.02billion it closed for trading in 2022.

However, in Q1 2023, Transcorp Hotels reported N8.25billion revenue, an increase of 17.17 per cent from N7.04 billion reported in Q1 2022 while cost of sales closed Q1 2023 at N2.45 billion, a growth of 28 per cent from N1.92 billion reported in Q1 2022. 

Consequently, gross profit closed Q1 2023 at N5.8billion, a growth of 13.2 per cent from N5.13billion reported in Q1 2022.

Amid a difficult operating environment, Transcorp Hotels reported N4.13billion operating expenses in Q1 2023, an increase of 30 per cent from N3.18billion reported in Q1 2022.

operating expenses

The interplay between cost of sales and operating expenses impacted on profits in Q1 2023 under review. As profit before tax dropped to N841.6million in Q1 2023 from N1.07billion in Q1 2022, profit after tax declined by nearly 50 per cent to NN462million in Q1 2023 from N853.68million reported in Q1 2022.

Meanwhile, the company in 2022 financial year ended December 31, 2022 declared a resounding performance, driven by the management’s effective management and innovations.

Transcorp Hotels reported N31.44billion Revenue in 2022 financial year, an increase of nearly 47 per cent from N21.42billion in 2021, driven by 61 per cent or N19.15billion contribution from Transcorp Hotels room revenue in 2022.

The top hospitality company’s growth in revenue is on the backdrop of the management expansion in key business segments such as its Rooms service in Transcorp Hilton Abuja and Transcorp Hilton Calabar as both remain the first-choice destination for high-profile guests, and catering to guests from all over the world for any travel need including business and leisure.

The group’s cost of sales hits N9.05billion in 2022, an increase of 64 per cent from N5.51billion reported in 2021.

Transcorp Hotels N3.37 billion spent maintaining room and N4.85billion food and beverages were the overall drivers of cost of sales in 2022.   

This brings the group’s gross profit to N22.39 billion in 2022, an increase of 41 per cent from N15.9billion reported in 2021.

As operating expenses stood at N14.63billion in 2022, an increase of 31.8per cent from N11.1billion in 2021, operating profit grew by 51.1 per cent to N8.66billion in 2022 from N5.73billion in 2021. 

The group’s operating expenses was driven by N2.33billion energy cost in 2022 from N1.68billion in 2021 and N2.2billion Employee costs in 2022, an increase of 31.2 per cent from N1.67billion reported in 2021.

Out of total borrowing of N23.96 billion in 2022 from N23.70 billion in 2021, the group paid N4.14billion interest on debts and borrowings in 2022 from Nbillion reported in 2021. 

The group’s bottom-line performance showed a resilient result and accounts with N4.53billion profit before tax in 2022, an increase of 172 per cent from N1.66billion inn 2021.

With about N1.91billion tax expenses, Transcorp Hotels closed 2022 financial year with N2.62billion profit after tax as against N1.12billion reported in 2021.

Amid impressive 2022 performance, the management paid shareholders a dividend of 13 kobo per share, amounting to N1.33billion as against N716.98million paid to shareholders in 2021 financial year.

Strong Balance sheet

As of December 31, 2022, Transcorp Hotels reported N120.5billion total assets from N115.9billion reported in full year ended December 31, 2021.

The group’s current assets stood at N10.08billion in 2022, an increase of 4.5 per cent from N9.64billion reported in 2021FY, while total long-term assets closed 2022 at N110.41 billion, representing a growth of 3.9 per cent from N106.25billion reported in 2021 FY.

The balance sheet structure showed stronger retained earnings of about N45.21billion in 2022 from N44.58billion in 2021 financial year to close total equity at N62.8 billion as of 2022 from N62.22billion reported in 2021 financial year.

In addition to balance sheet structure, total liabilities closed 2022 at N57.7billion from N53.67billion in 2021, to bring the proportion of total liabilities/ total assets at 47.9 per cent from 46.3 per cent reported in 2021 FY.

As current liabilities increased to 14.3 per cent from N25.633billion in 2021 to N29.3billion in 2022, long-term liabilities also gained 28 per cent to N28.39billion in 2022 from N28.04billion in 2021 FY.

CEO’s View

The Managing Director/ CEO of Transcorp Hotels, Dupe Olusola in a statement, said the Group’s   properties in Abuja and Calabar remain the first-choice destination for high-profile guests, catering to guests from all over the world for any travel need including business and leisure.

According to her, “We have delivered an excellent performance in the first half of the year. We are constantly innovating and tailoring our services to the needs of our guests. We are particularly proud of the spectacular performance in our domestic tourism and leisure segment despite the recovery in our International Business Traveller (IBT) and Group Business Segments.

“Our IBT and Group business segments have continued to recover and contribute significantly to our growth. This is a testament to our commitment to continually create value for our customers and stakeholders in line with our corporate mission.”

She added that, “The hospitality brand is investing in some major projects to expand its operations and further enhance value. These projects include improvements at its hotels, especially Transcorp Hotels Calabar where rooms and facilities are being upgraded.

“Transcorp Hotels is also working on extending the rooming at Transcorp Hilton Abuja to cater to the frequent overflow, as the hotel remains first choice for guests in Abuja. Other projects are billed for Lagos and Port Harcourt.”