• 2Q10 net loss of S$9.2m within expectations, hit by Bangkok woes
• Overall forward bookings grew 21% yoy but Thailand remained weak (-9%)
• Launch new fund to grow its China presence
• HOLD, pending improved earnings visibility, TP S$0.98

2Q10 PATMI of –S$9.2m (>100% yoy).
Banyan Tree Holdings reported one of its largest losses in a quarter to date, on the back of a marginal 2% increase in topline to S$60.7m. Topline could have been stronger if not for the political crisis crippling its Bangkok operations. Performances from Maldives and Phuket resorts were strong. There were 4 cancellations for
Residences sales and 2 villas sales in 2Q10. Only 1 town home was sold. Cost cutting measures ceased, which resulted in higher operational costs and hence lower earnings. EBITDA margins and net margins declined to 1.6% and –15% respectively (15% and –7.1% a year ago).

Brighter but still challenging 3Q10 Forward bookings were up 21% yoy, mainly from its non-Thai hotels (+39% ahead yoy) but demand for Thai-hotels remain weak (-9% yoy). Property sales are likely to remain slow going
forward.

Divestments to rebalance portfolio is positive.
The Group is in the process of divesting Dusit Thani hotel (for S$110m, at 2.7x P/BV) and could look to sell more assets in Thailand. The group aims to reduce its Thailand exposure from 69% to c45-50% in the longer term.

New China Fund.
Group also unveiled plans to kick-start this fund in 3Q10 with a target size of RMB 1bn (US$150m). The group aims to have its first closing by 3Q10.

Recommendation
HOLD TP S$0.98.
We maintain our hold call awaiting for earnings stability with better forward hotel booking visibility and a return in investor confidence towards property sales.