Hot stock: Mandarin Oriental climbs 10%, Nomura upgrades stock to neutral

MANDARIN Oriental International's share price climbed nearly 10 per cent on Tuesday, a day after the hotel arm of Jardine Matheson Group said it was reviewing the long-term strategic options related to The Excelsior in Hong Kong.

In Singapore, the stock rallied to US$1.88 a share on Tuesday morning, from its close of US$1.71 on Monday. It was trading around US$1.79, up 8 US cents, or 4.39 per cent, by 04:09pm.

On Monday, Nomura upgraded the stock to neutral from reduce, and pegged its new target price at USD1.73 a share. The research house said the new target price took into account a 67 US cent a share option value for the potential sale.

Nomura estimated that the transaction, if completed, could result in a significant one-off profit and cash inflow for Mandarin Oriental. The Excelsior site is estimated to be worth around HK$20 billion.

But trading at 17 times its estimated 2017 enterprise value over earnings before interest, tax, depreciation, and amortization, Mandarin Oriental is deemed unattractive.

In its gaming and lodging coverage, the research house prefers MGM China, Galaxy and SJM Holdings.