PPHE Hotel Group

LN: PPH

£743m market cap

1755p last close

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

Investment summary

PPHE’s FY18 results not only beat our expectations, the company also confirmed an extensive investment programme, including news of advanced negotiation to enter the lucrative New York boutique market. Importantly, management continues to prove adept at resisting the temptation to pay up, so PPHE retains a healthy financial flexibility. The company remains positive about 2019 despite clear challenges, especially in London for obvious reasons, and has raised the final dividend from 13p to an impressive 19p. Updated EPRA NAV per share at December 2018 is £24.57, up marginally from June. We are in the process of updating our model to reflect the FY18 results.

Y/E Dec
Revenue (£m)
EBITDA (£m)
PBT (£m)
EPS (fd) (p)
P/E (x)
P/CF (x)
2016A 272.5 94.1 34.2 69.9 25.1 9.3
2017A 325.1 107.3 34.5 64.2 27.3 6.5
2018E 340.0 112.0 38.0 68.8 25.5 6.6
2019E 350.0 118.0 44.0 81.6 21.5 6.3
Last updated on 20/03/2019
Industry outlook

Security and Brexit uncertainty are concerns, but the London hotel market has shown admirable resilience (RevPAR up 3% in 2018 and 6% in January 2019, per STR) and benefits from increased tourism owing to sterling weakness. Greater measurable worries are room supply, which is above its long-term trend, slower economic growth and rising operating costs. GL, London’s largest hotel owner/operator, continues to “maintain a cautious outlook”, while, per pwc, 2019 market RevPAR may be flat, albeit at a high level.

Last updated on 20/03/2019
Sector
Consumer
Share price graph
Balance sheet
Forecast net debt (£m) 440
Forecast gearing ratio (%) 95
Price performance
%
1m
3m
12m
Actual (0.9) 6.4 58.8
Relative* (1.7) (2.4) 55.4
52-week high/low 1800.0p/1105.0p
*% relative to local index
Key management
Eli Papouchado Chairman
Boris Ivesha CEO
Daniel Kos CFO

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