Hostmore

LN: MORE

Market Cap£20m

Last Close 16.02p

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

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Investment summary

Ahead of H122 results in September, Hostmore confirmed on 11 July that, despite sector operating challenges, its like-for-like (l-f-l) revenues since 23 May are as expected in its May update, which assumed up to 8% lower l-f-l dine-in volumes on 2019 for the rest of 2022, mitigated by pricing. Organic expansion is also on track with the new 63rd+1st in Edinburgh part of five openings planned this year, while enhanced banking facilities reinforce a strong balance sheet. For FY23 Friday’s rejuvenation prospects in likely improving conditions and clear growth opportunities drive our expectation of a sharp rebound in earnings. Hostmore’s rating of 4x FY23e EV/EBITDA is low against an average of c 7x for peers.

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 5.06 3.2 0.4
2022E 218.0 39.5 5.5 3.73 4.3 0.5
2023E 251.0 47.5 13.0 8.49 1.9 0.4
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 cheaper prices and on more flexible terms and the erosion of competition (industry sources estimate a 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 since March are c 4% up on 2019 (Coffer CGA) but well down in real terms, given high inflation.

Last updated on 28/09/2022
Content on Hostmore
Hostmore – Back on track
Consumer | research Update | 14 July 2022
Friends toasting with beer
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
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Share price graph
Balance sheet
Forecast net debt (£m) 21.5
Forecast gearing ratio (%) 17
Price performance
%
1m
3m
12m
Actual (35.7) (50.2) N/A
Relative* (31.4) (47.4) N/A
52-week high/low 133.6p/16.0p
*% relative to local index
Key management
Gavin Manson Chairman
Robert Cook CEO
Alan Clark CFO