Research: Consumer
Pierre et Vacances is successfully repositioning itself under new management in the increasingly popular market of local and environmentally friendly tourism. After last year’s restructuring, premiumisation of established brands, higher-than-expected cost savings, developing ancillary spend and portfolio rationalisation helped to deliver FY23 EBITDA well above latest guidance (€137m vs €130m+) and 30% up year-on-year, adjusted for COVID-19 support in FY22. Early indications for the current year are also positive, driving guidance of EBITDA of €145–150m, backed by clear guest satisfaction with upscaling and further efficiencies. This may be cautious if the loss-making operating leases of Seniorales are excluded (sale imminent), thereby reducing consensus FY24e EV/EBITDA of under 5x.
Pierre et Vacances |
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Travel and leisure |
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22 December 2023 |
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Pierre et Vacances is successfully repositioning itself under new management in the increasingly popular market of local and environmentally friendly tourism. After last year’s restructuring, premiumisation of established brands, higher-than-expected cost savings, developing ancillary spend and portfolio rationalisation helped to deliver FY23 EBITDA well above latest guidance (€137m vs €130m+) and 30% up year-on-year, adjusted for COVID-19 support in FY22. Early indications for the current year are also positive, driving guidance of EBITDA of €145–150m, backed by clear guest satisfaction with upscaling and further efficiencies. This may be cautious if the loss-making operating leases of Seniorales are excluded (sale imminent), thereby reducing consensus FY24e EV/EBITDA of under 5x.
H223: Strategy already paying off
With the initial success of turnround measures in H123 boosted by a COVID-19 rebound (28% reduction in seasonally structural EBITDA loss, adjusted for non-recurring items), there was nonetheless ample vindication of the new tourism revitalisation strategy during the key H2 trading period. Rate-driven accommodation revenue growth of 8%, allied with 9% higher income from on-site activities and Maeva online holiday rentals, plus continued strict cost control, contributed to a 12% increase in EBITDA (£197m vs £176m excluding non-recurring items and losses from non-core Seniorales and major projects). Annual capex of €119m (primarily on Center Parcs renovations) as key to the premiumisation strategy was comfortably absorbed, with net cash at the period end up slightly at €79m, albeit thanks to a favourable change in working capital.
FY24 profit expectations: Scope to surprise
Apart from a positive outlook statement and likely increasing returns from recent major investments, a marked reduction in loss at non-core Seniorales (€11m in FY23) would alone account for the increase in FY24 EBITDA from €137m to €145–150m, per new guidance. Confirmed pricing power and sharply rising guest satisfaction across the board in a sweet spot of tourism (eco-friendly, close to home and nature, family oriented) suggest more in reserve, as with original FY23 guidance.
Valuation: Undemanding
An FY24e EV/EBITDA of under 5x seems to ignore the turnround potential of Pierre et Vacances, facilitated by robust finances, as well as evident progress to date.
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Consensus estimates
Source: Refinitiv. Note: *Company operational reporting (pre-IFRS 16). **Excluding non-recurring €51m COVID-19 subsidies and rent savings. ***Including €418m gain from restructuring. |
EDISON QUICKVIEWS ARE NORMALLY ONE-OFF PUBLICATIONS WITH NO COMMITMENT TO WRITING ANY FOLLOW UP. QUICKVIEW NOTES USE CONSENSUS EARNINGS ESTIMATES.
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Research: Healthcare
IRLAB Therapeutics has announced that IRL757, a drug candidate being developed for the treatment of apathy in Parkinson’s disease (PD) and other neurological conditions, is now Phase I-ready. Management is preparing the required documentation to submit a Phase I clinical trial application for regulatory approval, on track with the company’s previously disclosed guided timelines. The company has also reported that it has entered into a grant agreement with the Michael J. Fox Foundation (MJFF) for Parkinson’s Research, and will receive funding amounting to over $2m (c SEK20.2m) to support this programme. IRLAB will use the grant to conduct the Phase I trial for IRL757 in apathy, while also benefiting from the experience and expertise provided by the MJFF. As there are currently no approved therapies for apathy, and with support from the MJFF, which is the largest non-profit funder of PD research, we view this as a key opportunity for IRLAB to potentially address this unmet medical need.