Cresta stock shines as profits double

Brian Benza
Staff Writer | Thursday October 4, 2012 00:00

 

In the week preceding the independence holidays, Cresta was the biggest gainer on the local bourse rising 18.7 percent to close out at 89 thebe, making a turnaround from the previous week's top loser position on the market. During the week, Cresta announced its half-year financial results highlighting that the group achieved an increase in revenue of 21.7 percent off the back of the corresponding year, from P99 million to P108.7 million. This was supported by the increase of the average room rates by over 14 percent while the occupancies dipped by one percent.  For the period, the group achieved an after tax profit of P3.7 million, compared to the P1.9 million for the comparable period last year. As a result, its earnings per share (EPS) rose from 1.03 thebe to 2 thebe per share. Total operating and administration expenses decreased slightly from P18.7 million to P18.6 million.

In the period, the group's financial position saw its total assets rise to P169 million from P140.5 million as a result of its recent investment in expanding its operations in Zambia and Botswana. 'The company outlook is focused on expanding its operations and breaking into new markets which was highlighted through an acquisition of Golf View Hotel in Zambia,' said the company in a statement.

The Golf View Hotel acquisition was financed through a loan of about P20 million adding towards the group's debt to equity ratio, which stood at 28.7 percent whereas debt to total assets was 17 percent. The group is in the process of constructing the Cresta Mahalapye hotel which is due to open at the end of 2012. The total estimated expenditure on the project is around P10 million. Already P4 million has been spent on the project as Cresta positions itself to further expand its mark in the hotel industry.

The company recently announced a new strategy aimed at combining an aggressive customer retention scheme, a focus on service excellence and market intelligence to keep ahead of the field in the increasingly competitive sector. Previously, managing director, Tawanda Makaya told Mmegi Business that the customer retention strategy and enhancement of service excellence would go hand in hand with the group's attempt to maintain its market share. 'We will focus on service excellence to defend ourselves from other players,' he said 'This includes hygiene audits and mystery guests as well as customer loyalty programmes. We have also said we will not compromise minimum basic standards in our facilities such as gyms, Wi-fi, CCTV security, LCDs and others.'

Cresta Marakanelo is the country's largest hotel group with eight hotels, close to 800 rooms and a wide geographical spread that includes a strong presence in urban and tourist areas. The group listed on the local bourse two years ago through an Initial Public Offer (IPO), a private placement and an employee scheme.