Broker snap: IHG still a sell, says UBS

LONDON (ShareCast) - UBS (NYSEArca: DJCI - news) has maintained its sell rating for Holiday Inn owner InterContinental Hotels Group (IHG) following the firm's full-year results on Tuesday. The company saw solid growth in revenues, earnings and margins in 2011, though the crucial metric of revenue per available room (RevPAR) saw an easing off in the annual growth rate to 4.6%; for 2011 as a whole IHG saw global RevPAR growth of 6.9%. The firm said that the disposal of the InterContinental Barclay hotel in New York (Frankfurt: A0DKRK - news) is still ongoing, but UBS thinks that without this, a special dividend may not materialise. "A refurb has already started, perhaps suggesting hopes for a sale near-term are fading," the broker said. "With increased maintenance capex of $150m (including the Barclay refurb) and growth capex of $100m-$200m for 2012, some investors may be disappointed the company is seeking growth, at the expense of the fundamental, asset-light model." UBS also draws attention to management's comment that the 3-5% medium-term room count target is unlikely to be met in current financing conditions, with guidance for 2012 at 2-3%. Nevertheless, the broker raises its price target by 5% from 1,050p to 1,100p after upping its earnings per share estimates for 2012-13. BC