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Mantra Group Ltd reports impressive interim profit result: Is this top performing IPO still a buy?

Investors (including yours truly) are still kicking themselves for missing out on the Mantra Group Ltd (ASX: MTR) initial public offering (IPO) in June 2014.

Since its float the share price has soared 80% making it one of the top-performing listings of last year. It even beat the stellar gains achieved from bigger IPOs such as Medibank Private Ltd (ASX: MPL) which is up 18%, and Spotless Group Holdings Ltd (ASX: SPO) which has rallied 21%.

Mantra is the operator of leading hotel brands Peppers, Mantra and Breakfree. The company’s interim results which were released on Friday morning show why the company has found favour with investors.

Here are the key results

For the six months ending 31 December 2014, Mantra reported:

  • 9.4% growth in revenue to $252.7 million
  • 19.1% growth in pro-forma net profit after tax but before amortisation of lease rights (NPATA) of $23.1 million
  • Declaration of a 5 cent fully franked interim dividend. The shares will trade ex-dividend entitlement on 4 March, with payment due on 31 March


As the second-largest accommodation operator in Australia, Mantra’s venues attract over two million guests each year. The company boasts a capital light model and is diversified both by clientele and location. Its operations span business, leisure, luxury retreats, costal resorts, CBD locations and serviced apartments across Australia, New Zealand and Indonesia. Overall the business model appears attractive.

Management has reconfirmed the prospectus’ full year forecasts for revenues of $490.9 million and NPATA of $35.3 million. However with a market capitalisation approaching $800 million, arguably the stock is fully priced and there could be better opportunities elsewhere.

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Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned.


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