PPHE Hotel Group — Update 2 March 2016

PPHE Hotel Group (LN: PPH)

Last close As at 25/12/2024

1,070.00

0.00 (0.00%)

Market capitalisation

455m

More on this equity

Research: Consumer

PPHE Hotel Group — Update 2 March 2016

PPHE Hotel Group

Richard Finch

Written by

Richard Finch

Analyst, Consumer

Consumer

PPHE Hotel Group

Resorting to type

Proposed acquisition

Travel & leisure

3 March 2016

Price

630p

Market cap

£265m

£0.78/€

Net debt (€m) at end June 2015

535.9

Shares in issue

42.0m

Free float

23%

Code

PPH

Primary exchange

LSE

Secondary exchange

N/A

Share price performance

Business description

PPHE Hotel Group (formerly Park Plaza Hotels) is an integrated owner and operator of four-star, boutique and deluxe hotels in gateway cities and regional centres, predominantly in Europe.

Analysts

Richard Finch

+44 (0)20 3077 5700

Paul Hickman

+44 (0)20 3681 2501

PPHE Hotel Group is a research client of Edison Investment Research Limited

The proposal to acquire outstanding interests in its Croatian resort businesses is an intriguing complement to PPHE’s focus on European gateway cities and completes its tidying of ownership issues, allowing it to capitalise on opportunities now afforded by full control of its estate. Although capital intensive, ownership offers scope for potential asset appreciation. We will update our forecasts once key financials of the proposed transaction have been clarified. Meanwhile, company results for 2015 are due imminently.

Year end

Revenue (€m)

EBITDA
(€m)

PBT*
(€m)

EPS*
(c)

DPS
(p)

EV/EBITDA
(x)

12/13

244.8

82.7

24.7

60.2

14.0

10.0

12/14

270.4

94.8

35.7

85.5

19.0

8.7

12/15e

297.0

105.0

40.5

96.4

20.0

8.8

12/16e

315.0

110.0

41.0

96.7

21.0

8.7

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, share-based payments

PPHE is looking to buy the remaining 80% of its Croatian joint venture, which operates as Arenaturist, a long-established hospitality group consisting of seven hotels (four under the Park Plaza brand), six holiday apartment complexes and eight campsites, all in prime seaside locations in the south of Istria. The business has been managed by PPHE since 2008.

Pending completion expected in mid-April, full payment terms and financial prospects have yet to be quantified by management. While 2015 EBITDA is reported as c £12.4m, the lack of guidance about related year-end debt prevents our EV/EBITDA assessment. In addition, we understand that analysis of the finances of publicly traded core activity Arenaturist d.d. is not meaningful, given the significance to the joint venture of other private businesses. However, we are encouraged that for the current year Arenaturist d.d. management expects further progress on a maintained estate, ie a 5% increase in EBITDA (in 2015 HRK107m or c £10.4m).

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Copyright 2016 Edison Investment Research Limited. All rights reserved. This report has been commissioned by PPHE Hotel Group prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Aus and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.
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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

Wellington +64 (0)48 948 555

Level 15, 171 Featherston St

Wellington 6011

New Zealand

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

Wellington +64 (0)48 948 555

Level 15, 171 Featherston St

Wellington 6011

New Zealand

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