PPHE Hotel Group Going Places
Edison | Sep 20, 2017 09:27AM ET
PPHE Hotel Group Ltd (LON:PPH) has arguably trumped its strong H117 results by highlighting its “unprecedented financial position,” which provides exciting scope for management with an enviable development record. Excess liquidity is substantial (we estimate £250+m cash after Waterloo sale backed by a valuation surplus) and its deployment is actively under review. Meanwhile impressive +23% H117 EBITDA despite headwinds and a positive outlook have led us to raise forecasts, if marginally. Heartland London recovered well, with key openings soon making their mark. A meager rating belies PPHE’s proven profit delivery and asset backing (fair value c £18/share).
The half saw strong underlying growth across the board (double-digit but for renovation impact in otherwise buoyant Netherlands). Admittedly, London, PPHE’s main profit center, was flattered by a weak comparative after the Paris attacks (core London RevPAR up c 10% against down 5% in H116). By contrast, Croatia flourished with +19% like-for-like and sterling revenue up by a third in June, the only high-season month in the period. EBITDA progress was more uneven as core London (+c 15%) and Netherlands (local currency -8%) were curbed, respectively, by cost pressures (payroll and business rates) and renovation at the flagship Victoria Amsterdam. Whereas Croatia was down owing to first inclusion of loss-making Q1, Germany and Hungary EBITDA was boosted by lower rent after Berlin deals.
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