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Thu 8 Mar 2007 05:08 PM

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Saudi Prince issues profit warning

Prince Alwaleed Bin Talal’s Kingdom Hotel Investments misses analysts estimates for 2006.

Saudi Arabia's most famous investor, Prince Alwaleed Bin Talal, was forced to issue a profit warning yesterday, only a year after floating Kingdom Hotel Investments (KHI) in London and Dubai.

Kingdom Hotel Investments is a hotel and resort investment company focused on luxury properties, predominately in the Middle East and Africa, although it also has selective investments in Asia and Europe, including the George V in Paris and Raffles Resort in Thailand.

KHI reported yesterday that poor trading at its hotels in Damascus, the Red Sea and Mauritius had been slower than expected.

It also disclosed that the sales of anciliary property assets, which it had expected to go through in 2006, had been slower than expected.

Net income, which was forecasted to be in the region of $40 million for the year, is not expected to be closer to $30 million, according to analysts.

Shares fell by 8 percent yesterday following the news.

A company spokesperson said that 2006's results should be viewed in the context of an aggressively expanding business, and urged analysts to update their research on the group's investments.

"It's a young company that's grown incredibly fast. As the business matures the quality of earnings will improve. The fundamental strength of the company has not altered drastically," the spokesperson said.

To illustrate the point, KHI yesterday announced the acquisition of development land in Manila for a 300-room Fairmont hotel, a 30-suite Raffles hotel and 189 Raffles residences that will cost $152 million.

When KHI floated last year, it raised around $750 million in investment capital. That money was put to use expanding the company's portfolio of hotels.

At flotation, KHI had interests in 15 hotels and 11 developments. This has expanded to 19 operational hotels and 14 under development over the past year.

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