Ikeja Hotel Posts Negative for Three Years Straight
Ikeja Hotels failed to optimise shareholders’ wealth, though the hospitality company ramped up borrowings. Nigeria’s top hospitality company has suffered earnings, and it was stretched by the outbreak of the pandemic in 2020.
In 2020, Ikeja Hotel reported N6.721 billion loss after tax, from about N835 million annual profit in 2019. The company’s loss moderated to N180.614 million in 2021 as economic activities picked up.
At the end of the financial year 2022, the company’s loss widened further amidst a battle to survive to post covid-19 pressures while increasing rivalry among competing brands.
In its audited statement for the year, Ikeja Hotel Plc reported N3.938 billion loss after tax consideration without dilution to its shareholding structure.
The downturn in the company’s performance opened the door for more investors to inject capital – given the fact that the company has a strong footprint in the market.
Shareholders and value hunters seeking upside have a chance to pump funds into Ikeja Hotel Plc, which is currently trading below its net asset valuation.
Its 2.078 billion shares outstanding are worth less than N2.889 billion, an easy entry point because its net asset as of December 2022 was higher.
On each share, Ikeja Hotel reported it lost N1.89, a strong increase when compared with 9 kobo lost on each of its outstanding shares.
Steep administrative spending was its value breaker, in addition to a surge in sales and marketing expenses –driven by higher spending on advertisement and publicity.
This was driven by a large increase in the directors’ remuneration and other expenses – perhaps benefit in kind and allowances.
Actually, employee costs slow down but there was an increase in management fees, and operators’ incentives fees and the company doubled down expenses in conducting its annual general meetings.
Strategic investors will compete to gain entry against six major shareholders that has more than enough weight to block any incursion.
Oma Investment Limited has the largest interest in Ikeja Hotel, owing 26.29% of the entire outstanding shares, according to an audited financial statement submitted to the regulators.
No other shareholders came close, but at a distance, new investors will have to compete with Wagmest Nigeria Limited, owing 8.67%, RFC Limited 7.33% and Alurum Investment Limited’s 5.43% interest.
Others are Dr, Obafoluke Otudeko’s 5.09% stake and Associated Venture International Limited’s 7.47% shareholding percentage.
Ikeja Hotel’s market valuation has trended lower after the company’s earnings performance failed to impress the sell-side investors.
Today, stock market investors placed less than N2.5 billion bounty on the hospitality player listed on the Nigerian Exchange.
From the beginning of the year to date, the company’s return hits 13.33%, which makes it a healthy capital gain, though, in the last month, it has lost 5.56% to a downturn in the local bourse.
Ikeja Hotel Plc engages in the operation of hotels and the provision of catering services. It operates through the following geographical segments: Lagos and Abuja.
The hospitality player’s share price had been rated buy while some very optimistic analysts handed it a strong buying rating on expected solid upside potential.
According to its financial statement for 2022, revenue growth failed to translate to an improved bottom line as the hospitality player’s profit slipped.
Instead, its loss after tax widened to about N4 billion, detail from its audited financial statement show. In 2021, Ikeja Hotel’s last after-tax was N180.614 million. #Ikeja Hotel Posts Negative for Three Years Straight
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