Société des Bains de Mer — Sharing the love

Research: Consumer

Société des Bains de Mer — Sharing the love

Under comprehensive new management, Société des Bains de Mer (SBM) is building on its continued success (newly reported record EBITDA of c €150m for FY24) by looking to monetise its iconic Monte-Carlo brand in ‘new directions’ of international development and property. The purchase of a proposed luxury hotel in the French Alps (Courchevel), the company’s first such international transaction, and a new partnership with global restaurant group D.ream mark its intention to reach its customers where they travel and reside. While not immediately earnings transformative (the hotel faces long-term renovation and just one restaurant, in Dubai next year, has been announced), these moves suggest an arguably symbolic ‘opening up’ of SBM and are a clear growth driver, enabled by strong finances (net cash + liquid investments €385m + 10% of Banijay, c €375m).

Richard Finch

Written by

Richard Finch

Analyst, Consumer

Consumer

Société des Bains de Mer

Sharing the love

Travel and leisure

QuickView

27 June 2024

Price

€100

Market cap

€2,450m

Share price graph

Share details

Code

BAIN

Listing

Euronext Paris

Shares in issue

24.5m

Business description

Monte-Carlo Société des Bains de Mer (SBM) is the leader in luxury tourism in Monaco, where it also has exclusive rights to gaming. Within its iconic Monte-Carlo ‘resort’ operations include four hotels, two casinos, over 30 restaurants, entertainment and long-term commercial and residential property rental.

Bull

Leader in diverse markets of longstanding appeal with iconic assets and new management intent on monetising the Monte-Carlo brand.

Resilience of property rental (77% of FY24 operating profit) with favourable lease indexations.

Strong finances (net cash and liquid investments), facilitating goals of international and property development.

Bear

Economic and geo-political uncertainty and gaming volatility, mitigated by business mix, notably long-term property rental.

Risk of change in gaming regulations or loss of exclusive rights in Monaco, although already exposed to local and international competition.

Lack of share liquidity (small free float, under 20%).

Analysts

Richard Finch

+44 (0)20 3077 5700

Russell Pointon

+44 (0)20 3077 5700

Under comprehensive new management, Société des Bains de Mer (SBM) is building on its continued success (newly reported record EBITDA of c €150m for FY24) by looking to monetise its iconic Monte-Carlo brand in ‘new directions’ of international development and property. The purchase of a proposed luxury hotel in the French Alps (Courchevel), the company’s first such international transaction, and a new partnership with global restaurant group D.ream mark its intention to reach its customers where they travel and reside. While not immediately earnings transformative (the hotel faces long-term renovation and just one restaurant, in Dubai next year, has been announced), these moves suggest an arguably symbolic ‘opening up’ of SBM and are a clear growth driver, enabled by strong finances (net cash + liquid investments €385m + 10% of Banijay, c €375m).

Bonne continuation

The reorganisation of SBM since early 2023 has seen a mix of the old and the new, with the appointment of Stéphane Valeri, a prominent Monegasque, as CEO and a fresh management team from major international companies, including Vincent Bouvet as CFO from Sodexo. The acquisition in Courchevel of the Palace des Neiges (78 rooms) is the team’s first significant strategic move, with the destination seen as highly complementary to Monaco in terms of clientele and brands as well as seasonality as a ski resort. No financial details have been disclosed. Renovation to luxury status sees closure until 2026. Management has talked of looking also at Dubai, Miami, Saint-Tropez and French overseas territories for hotel opportunities. Similar destinations are on the cards for SBM’s new restaurant partnership with D.ream, which has more than 80 luxury sites in 16 countries, including Monaco.

FY24 embedded rental earnings power

FY24 saw continued progress by property rental, with operating profit up 9% thanks to maximum occupancy and positive lease indexations, exemplified by the success of the One Monte-Carlo exclusive multi-use real estate project. Rental (commercial and residential) contributed 77% of operating profit, dwarfing gaming, SBM’s calling card (11%). Net cash was €69m and investments in support of strategy €316m.

Valuation: Lacking visibility

The absence of market forecasts and singularity of SBM’s business and assets do not make for easy valuation. FY25e EV/EBITDA of under 14x, assuming continued profit growth, is below that of Hilton and Hyatt with luxury brands (16x), while the significance of rental in Monaco’s tight property market brings earnings resilience.

Historical financials

Year
end

Revenue
(€m)

Adjusted EBITDA (€m)

Net income
(€m)

EPS
(€)

DPS
(€)

EV/adjusted
EBITDA (x)

03/23

667.0

145.3

67.0*

2.7*

1.2

12.3****

03/24

704.0

149.6

103.9**

4.2**

***

14.0****

Source: Société des Bains de Mer accounts. Note. *Excluding profit from transfer of holding in BetClic to FL Entertainment (now Banijay Group). **Including c €15m dividend income from Banijay. ***To be declared in imminent annual report. ***Including c €375m from 10% holding in Banijay.

EDISON QUICKVIEWS ARE NORMALLY ONE-OFF PUBLICATIONS WITH NO COMMITMENT TO WRITING ANY FOLLOW UP. QUICKVIEW NOTES USE CONSENSUS EARNINGS ESTIMATES.

General disclaimer and copyright

This report has been prepared and issued by Edison. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: 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 and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. Where Edison has used consensus estimates within this publication, we do not guarantee their accuracy or completeness.

Exclusion of liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, 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 securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2024 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

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. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison 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.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison 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. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

General disclaimer and copyright

This report has been prepared and issued by Edison. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: 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 and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. Where Edison has used consensus estimates within this publication, we do not guarantee their accuracy or completeness.

Exclusion of liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, 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 securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2024 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

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. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison 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.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison 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. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

Latest from the Consumer sector

View All Consumer content

Consumer

OPAP — Winning strategy

Borussia-Dortmund_resized

Consumer

Borussia Dortmund — Taking on the world

Research: Investment Companies

Witan Investment Trust — Investors to benefit from deal with Alliance Trust

Following a review of Witan Investment Trust’s (WTAN’s) investment management arrangements, the boards of WTAN and Alliance Trust (ATST) have announced a combination of the two companies to create Alliance Witan PLC. Witan’s board unanimously recommended the deal, which ensures the continuation of its active multi-manager approach and a broadly similar investment strategy. With combined net assets of c £5bn, significant liquidity, economies of scale and eligibility for UK 100 index inclusion, Alliance Witan will aim to deliver a real-term return over the long term through a combination of capital growth and a rising dividend. It aspires to be the UK’s leading ‘one-stop shop’ for global equity investment, at the core of retail investors’ portfolios. The combination is expected to be finalised in September or October this year, subject to shareholder approval, and should deliver what the announcement deemed ‘substantial benefits’ for shareholders of WTAN, ATST and the new Alliance Witan trust.

Continue Reading

Subscribe to Edison

Get access to the very latest content matched to your personal investment style.

Sign up for free