SHID predicting 48 percent rise in revenue this year

Publicly listed PT Hotel Sahid Jaya International (SHID) expects to book an almost 50 percent increase in total revenue this year following the launch of the hotel chain’s newly renovated rooms.

Speaking after an extraordinary meeting with shareholders on Wednesday, SHID president director Hariyadi Sukamdani said that the use of the newly refurbished rooms would enable the company to boost total revenue to Rp 207 billion (US$23.4 million), an increase of about 48 percent from the Rp 147 billion booked last year.

“Our net profit is estimated to reach Rp 25 billion this year, increasing from about Rp 10 billion in 2011,” Hariyadi said. He said that the company had been hoping to reap up to Rp 15 billion in net profit last year. However, he said that depreciation and the expense of a recent reorganization within the company, which eliminated a deficit of Rp 275 billion, had lowered the gains.

Hariyadi said that a significant increase in revenue and net profits would be supported by the refurbished rooms. The company has been renovating its hotel rooms since 2008. Hariyadi said that 450 rooms were already ready for customers.

“We will finish the renovation of 271 more rooms, so that we will have 721 rooms ready for operation this year,” Hariyadi said.

The renovations have been financed by bank loans.

SHID on Wednesday obtained approval from shareholders to use more than 50 percent of the company’s total assets, which are worth Rp 1.22 trillion, to secure further financing from banks. Hariyadi said that Bank Victoria has already proposed loans of up to Rp 200 billion.

Hariyadi said that SHID would use the loans to support Rp 60 billion in capital expenditure for the renovations and to refinance loans that amount to Rp 120 billion from Bank Mega. The remaining funds were to be used as working capital.

SHID has also decided to seek loans from other banks to refinance Bank Mega’s loans, which will mature in 2013. SHID was granted loans from Bank Mega in 2008 that had an interest rate of 16 percent to finance the hotel chain’s renovation program.

“We remain in the bargaining process to obtain a lower interest rate from Bank Victoria. The bank has offered a rate of 13 percent before we carried out a quasi-reorganization. We hope that the bank will consider a lower risk in disbursing loans to us after the quasi-reorganization and give an interest rate in line with development in the market at around 10 to 11 percent,” Hariyadi said.

He added that a deal with Bank Victoria would likely be completed in the first half of the year. “We already got an offer letter from Bank Victoria. If we want to, we can ask for loans at this time. However, we have to look for the best for our company,” Hariyadi said.

“We will look for further funding from other banks to support expansion, possible expansions and to purchase land.”

He declined to reveal SHID’s acquisition plan.

“The point is that we will increase our production capacity,” Hariyadi said. (rcf)