Hostmore

LN: MORE

Market Cap£64m

Last Close 50.6p

Hostmore has been newly formed to provide a platform for the development of hospitality brands. Its current operations are Fridays, a UK nationwide chain of American-styled casual dining restaurants (85 sites), and 63rd+1st, a new cocktail-led bar and restaurant brand (three sites).

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Investment summary

Despite the impact of the Omicron variant Hostmore delivered a positive start as a PLC with FY21 pre-IFRS 16 EBITDA of £21.5m in line with January’s raised guidance and ‘very strong’ cash generation driving year-end net debt down to just £12m (our forecast: £25m) with significant headroom (£42m available cash and undrawn facilities). Notwithstanding a quiet start to 2022 with like-for-like (LFL) sales in the first eight weeks down 3% on 2019, management ‘remains positive,’ looking to capitalise on its 4% LFL sales growth on 2019 after the resumption of indoor trading in May 2021 and a strong expansion programme with six planned site openings this year, including its initial Fridays and Go quick service concept. Our forecasts are under review.

Y/E Dec
Revenue (£m)
EBITDA (£m)
PBT (£m)
EPS (fd) (p)
P/E (x)
P/CF (x)
2020A 129.1 23.5 (12.2) N/A N/A N/A
2021A 159.0 43.0 7.1 6.40 7.9 2.1
2022E 242.0 50.5 15.0 10.15 5.0 1.4
2023E N/A N/A N/A N/A N/A N/A
Industry outlook

COVID-19’s exacerbation of longstanding structural difficulties in UK hospitality has shown up undeniable growth opportunities for well-funded operators, notably the increasing availability of prime sites at ever cheaper prices and on more flexible terms and the erosion of competition (industry sources estimate potential loss at up to 30% of restaurants). Current challenges of rising costs and staff shortages are being mitigated by scale and career initiatives. Restaurant market LFL sales in Q122 up c 7% on 2019 (CGA Coffer).

Last updated on 20/05/2022
Content on Hostmore
Hostmore – Ready to party
Consumer | research Update | 26 January 2022
Friends toasting with beer
Hostmore – Delivering on its plans
Consumer | research Flash note | 9 December 2021
Friends toasting with beer
Hostmore – Full menu!
Consumer | research Initiation | 4 November 2021
Friends toasting with beer
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Share price graph
Balance sheet
Forecast net debt (£m) 25
Forecast gearing ratio (%) 21
Price performance
%
1m
3m
12m
Actual (19.7) (50.4) N/A
Relative* (16.7) (49.0) N/A
52-week high/low 133.6p/50.6p
*% relative to local index
Key management
Neil Johnson Chairman
Robert Cook CEO
Alan Clark CFO