Last close As at 05/08/2026
—
— 0.00 (0.00%)
Market capitalisation
—
Research: Consumer
PPHE’s H120 results, more notably those from Q220, reflect the full impact of COVID-19 lockdowns on demand, and the substantial progress that management has made in managing the cost base and cash burn. Demand from the leisure sector has returned relatively strongly but the rate of potential recovery in business travel remains uncertain. In recent weeks, the group’s average occupancy level of c 35% is above the 30% required for operational break-even with government support for jobs and business rates, but below the c 40% required in the absence of government support.
PPHE Hotel Group |
Leisure demand recovering
|
Travel & leisure |
QuickView
4 September 2020 |
Share price graph
Share details
Business description
Bull
Bear
Analysts
|
||||||||||||||||||||||||
PPHE’s H120 results, more notably those from Q220, reflect the full impact of COVID-19 lockdowns on demand, and the substantial progress that management has made in managing the cost base and cash burn. Demand from the leisure sector has returned relatively strongly but the rate of potential recovery in business travel remains uncertain. In recent weeks, the group’s average occupancy level of c 35% is above the 30% required for operational break-even with government support for jobs and business rates, but below the c 40% required in the absence of government support.
Strong costs and cash management
Group revenue fell by 89% in Q220 as occupancy declined to 10.7%, and the rate-focused strategy limited average room rate decline to 25%. The EBITDA loss of £6.8m reflects the fact that cash costs (revenue less EBITDA) of £17.2m were very well controlled vs Q219 costs of £59m. More favourable working capital, a focus on emergency maintenance capex and new funding led to a modest reduction in the cash position to £137m from £153m at the end of FY19. New project-specific funding and a term facility lead management to believe that PPHE has sufficient liquidity, with testing of debt service covenants delayed until summer 2021.
Demand returning gradually
Post lockdown, there have been steady increases in occupancy (c 35% occupancy more recently), notably from mostly domestic leisure and during weekends (80–90% occupancy) and a younger demographic with a focus on price and short-term booking patterns. In the absence of government financial support, management estimates that occupancy of c 40% would be required to achieve operating cash break-even. It is reassuring that PPHE continues to outperform its peers in its largest markets as it did before the lockdowns. Management continues to introduce new contactless and online initiatives to help increase customer confidence in visiting hotels.
Valuation: 57% discount to EPRA NAV
The shares are trading at a discount of 57% to EPRA NAV of 2,530p/share (2,546p in December 2019), albeit this has not been adjusted for any potential change in valuation due to COVID. Management believes a revaluation would not truly represent the underlying value of the assets and there is a lack of transaction evidence to support an accurate revaluation. It estimates that each 1pp reduction in the valuation of group properties would reduce the NAV by 38p/share, ie by 1.5%, and notes that some peers have recently reduced estimates of their own valuations by 3.3–11.7%.
|
Consensus estimates
Source: Refinitiv |
EDISON QUICKVIEWS ARE NORMALLY ONE OFF PUBLICATIONS WITH NO COMMITMENT TO WRITING ANY FOLLOW UP. QUICKVIEW NOTES USE CONSENSUS EARNINGS ESTIMATES.
|
||||||||||||
|
||||||||||||
Research: Healthcare
On 26 August 2020 Oncology Venture reported that its PARP inhibitor stenoparib (aka 2X-121) demonstrated activity against COVID-19 in vitro. Following up on this on its 28 August earnings conference call, the company announced that it intends to advance the programme to the clinic as soon as possible and it is currently seeking financing through grants and other sources to support the programme.