Transcorp Hotel Nigeria Plc has made its shares attractive to investors and shareholders with strong earnings growth despite general weakness in the hospitality sector as the company looks to build a footprint in high population cities across the West Africa region.
This afternoon the hospitality giant posted its first quarter 2016 results on the floor of the Nigeria Stock Exchange which showed net income increased by 35.20 percent to N964.79 million, from N713.57 million at March 2015.
Top lines also followed the same upward trajectory as sales were up by 14.30 percent to N3.67 billion in March 2016 amid rising inflation, a weak currency and a drop in oil price.
We in Nairametrics have the conviction that investors will swoop on the share prices of the company as they crave for an entity with strong margins.
Logically, a strong profit margins means a firm has increased its share of the market using focus and market penetrating strategy to leap-frog competitors.
Transcorp Hotels, a subsidiary of Transnational Corporation of Nigeria, (a conglomerate giant), was efficient and profitable as net margins increased to 26.23 percent in March 2016 as against 22.18 percent as at March 2015.
The company is efficient in managing direct costs attributable to projects as gross profit moved by 14.75 percent culminating in a 43.20 percent increase in operating profit to N1.19 billion.
The hotel tourism and hospitality sector has been growing on a snail pace on the back of terrorist attacks and lack of policy direction on part of the President Muhammadu Buhari’s government.
A clear policy direction on the part of government will see foreign investors parachuting into the country and hotel bookings will be on an upward trajectory because these investors must lodge.
Despite the aforementioned challenges, Transcorp Hotels is poised for growth as it approved expansion programme to build new properties in Lagos and Port Harcourt and effect upgrade to the Trancorp Hilton Abuja.
The board of directors of the hospitality giant further approved the sum of N2.81 billion as dividend, which translated to 40 kobo per share for the 2015 financial year.