Currency in GBP
Last close As at 26/05/2023
GBP0.23
▲ 0.20 (0.87%)
Market capitalisation
GBP29m
Research: Consumer
Notwithstanding the proposed tightening of restrictions amid concerns about the Omicron variant of COVID-19, Hostmore has accompanied news of continued buoyant trading with assurances of costs mitigation and further COVID-19 leasehold concessions this year and next. Confirmation of like-for-like EBITDA in October and November was up on 2019, and a positive response to Fridays’ Christmas promotions, reinforce our confidence in our current year forecasts. Meanwhile, expected growth opportunities in a favourable property market are being realised with a likely accelerated rollout (five sites in legal negotiations). We reiterate that an EV/EBITDA multiple of 6x FY22e is a sharp discount to that of its peers (we estimate c 10x average) and ignores Fridays’ strong rejuvenation prospects, backed by our forecast of FY22 financials well ahead of pre-pandemic levels.
Hostmore |
Delivering on its plans |
Trading update |
Travel & leisure |
9 December 2021 |
Share price performance Business description
Analysts
Hostmore is a research client of Edison Investment Research Limited |
Notwithstanding the proposed tightening of restrictions amid concerns about the Omicron variant of COVID-19, Hostmore has accompanied news of continued buoyant trading with assurances of costs mitigation and further COVID-19 leasehold concessions this year and next. Confirmation of like-for-like EBITDA in October and November was up on 2019, and a positive response to Fridays’ Christmas promotions, reinforce our confidence in our current year forecasts. Meanwhile, expected growth opportunities in a favourable property market are being realised with a likely accelerated rollout (five sites in legal negotiations). We reiterate that an EV/EBITDA multiple of 6x FY22e is a sharp discount to that of its peers (we estimate c 10x average) and ignores Fridays’ strong rejuvenation prospects, backed by our forecast of FY22 financials well ahead of pre-pandemic levels.
Year end |
Revenue (£m) |
EBITDA |
EBITDA |
PBT* |
EPS* |
EV/reported |
12/19 |
214.8 |
45.5 |
25.6 |
7.4 |
N/A |
N/A |
1220 |
129.1 |
23.5** |
1.7** |
(12.2)** |
N/A |
N/A |
12/21e |
150.0 |
35.0** |
18.5** |
(0.2)** |
(0.2) |
8.9 |
12/22e |
242.0 |
50.5 |
29.5 |
15.0 |
10.2 |
5.9 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. **Including UK government COVID-19 grants:
2020 £19.1m and 2021 £14.8m.
While an increase on 2019 in comparable EBITDA for October and November may have been boosted by the continued, if reduced, benefit of VAT rate reduction (down 7.5% on 2019 since 1 October), we may reasonably assume the growing success of Fridays’ wide-ranging brand extension initiatives, as reported in 3% market outperformance in the 20 weeks from resumption of indoor dining on 17 May and newly endorsed by the ‘pleasing’ average spend per head on the launch of new menus. We point also to the contribution of delivery and takeaway as an incremental business stream and the popularity of cocktails, a Fridays staple.
Looking ahead, despite Omicron worries, the net booking rate for Christmas has held steady at a high level thanks to a themed promotion. Operational challenges such as staffing and energy cost inflation are being met respectively by effective yield management and long-term hedges. A favourable property market and marked reduction in competition on pandemic fallout are facilitating further landlord concession agreements in addition to c £1m achieved in October as well as access to prime sites at more attractive prices (projected opening of the fourth 63rd+1st, Fridays’ complementary cocktail-led bar and restaurant brand, in Cambridge in H122 plus a confirmed pipeline of five sites).
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Research: Consumer
With profit in line with expectations, Games Workshop Group’s (GAW) H122 trading update is reassuring. The previously flagged forex and freight cost pressures have negatively affected pre-licensing profit. This was partially offset by an exceptional level of licensing income versus GAW’s trading history. Our FY22 forecasts are unchanged ahead of the publication of H122 results. The FY22e P/E of 25.0x is in line with GAW’s recent average multiple. Our DCF-based valuation remains £129 per share.
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