InterContinental Hong Kong hotel sale price "very acceptable", says Numis

10th Jul 2015 11:24

The $938m achieved by InterContinental Hotels Group on the sale of its five-star Hong Kong hotel "looks like a very acceptable price" said Numis Securities, adding that it was around $150m above its expectations."We estimate that the disposal will be around 3%-4% dilutive to FY16 earnings per share: this based on the assumption that IHG keeps the cash, but, in our opinion, it is far more likely that IHG will pay another special dividend."Numis said IHG is a well-managed business with an attractive business model and a sound strategy for growth. Organic growth prospects are promising and the company is well-positioned in the US hotel market, which is at the sweet spot in the cycle, with high occupancy, rising demand and limited supply driving strong growth in revenue per available room . "However, we believe the valuation is up with events, unless there is material M&A activity and a reduction in uncertainty with regards to China."Numis rates the stock at 'hold' with a 2,600p price target. At 11:23, shares were up 3% at 2,683p.