Compagnie des Alpes — New peaks

Research: Consumer

Compagnie des Alpes — New peaks

Galvanised by further strong investment-led sales in FY23 (up by 11% like-for-like), which more than absorbed a near-doubling of energy costs, Compagnie des Alpes (CDA) is awash with growth initiatives, backed by a targeted 15% rise in FY24 capex to €270m. The enhancement of a diverse and hugely popular estate, with over 23 million visitors pa across 22 key sites (12 of which are leisure parks and seven are outside France), provides scope for lucrative marginal revenue growth. Continued buoyancy in Q124, allowing for a change in timing of school vacations, complements the better-than-expected progress with environmental policy, which CDA sees as key to corporate wellbeing. On consensus FY24 EBITDA forecasts, double guidance of c 7% growth, CDA’s EV/EBITDA is 4.5x.

Richard Finch

Written by

Richard Finch

Analyst, Consumer

iStock-1304804045

Consumer

Compagnie des Alpes

New peaks

Travel and leisure

QuickView

23 February 2024

Price

€14.20

Market cap

€717m

Share price graph

Share details

Code

CDA

Listing

Euronext Paris

Shares in issue

50.5m

Business description

With over 23 million visitors in 2023, Compagnie des Alpes is a significant force in European leisure. It operates 10 leading high-altitude ski areas, including accommodation, in the French Alps and 12 leisure parks across Europe, notably Parc Astérix and Futuroscope.

Bull

Proven, successful complementary offers with high brand awareness and guest satisfaction.

Considerable development potential, driving lucrative marginal revenue growth and business diversification.

Strong finances, enabling sustained high level of capex as well as the payment of a dividend.

Bear

Climate change in ski areas, mitigated by highaltitude locations, snow management measures and a commitment to sustainability.

Changes in ski market demographic being addressed by promotion of mountain tourism.

Risk of loss of concession to operate a ski area, minimised by positive reputation of company.

Analysts

Richard Finch

+44 (0)20 3077 5700

Russell Pointon

+44 (0)20 3077 5700

Galvanised by further strong investment-led sales in FY23 (up by 11% like-for-like), which more than absorbed a near-doubling of energy costs, Compagnie des Alpes (CDA) is awash with growth initiatives, backed by a targeted 15% rise in FY24 capex to €270m. The enhancement of a diverse and hugely popular estate, with over 23 million visitors pa across 22 key sites (12 of which are leisure parks and seven are outside France), provides scope for lucrative marginal revenue growth. Continued buoyancy in Q124, allowing for a change in timing of school vacations, complements the better-than-expected progress with environmental policy, which CDA sees as key to corporate wellbeing. On consensus FY24 EBITDA forecasts, double guidance of c 7% growth, CDA’s EV/EBITDA is 4.5x.

More than what it says on the tin

Notwithstanding the competitive advantage of its predominantly high-altitude ski areas (above 1,800 metres) in terms of snow conditions, CDA is at pains to diversify its business offering in both winter and summer. This has been facilitated by becoming a key player in mountain accommodation through its 2022 acquisition of MMV, the second largest operator of hotels and club residences in the French Alps. CDA has also been extending the opening periods of its leisure parks, with a notable increase in demand at Halloween and Christmas. Aside from the eponymous ‘Alps’, recent awards for Park Astérix as ‘European Park of the Year Award 2023’ from Park World Excellence and Futuroscope’s ‘Chasseurs de Tournade’ as ‘World’s Best Attraction’ by the Themed Entertainment Association are testimony to CDA’s development expertise.

FY23: All-round strength

Trading results in the year to September 2023 confirmed the resilience of CDA’s model. A 16% rise in Leisure Parks like-for-like EBITDA, driven by 5% more visitors and 7% higher average on-site spend (reflecting capex up by a third) more than made up for the 6% reduction in Ski Areas like-for-like EBITDA, attributable to the 120% increase in energy costs. However, Ski Areas outperformed the market with 2% more skier days, thanks to their high-altitude positioning. With operating cash flow positive, despite the step-changes in capex and taxes, net financial debt/preIFRS 16 EBITDA was 2x, affording a 10% rise in the proposed dividend.

Valuation: Low altitude

While consensus FY24 EBITDA forecasts exceed management’s guidance, the rating may not reflect potential returns from sustained record capex on a landmark portfolio.

Consensus estimates

Year
end

Revenue*
(€m)

EBITDA*
(€m)

Net result*
(€m)

DPS
(€)

Yield
(%)

EV/adjusted EBITDA (x)

09/22

952.8

270.0**

83.0

0.83

5.8

4.7

09/23

1,125.5

303.2**

87.0

0.91

6.4

5.3

09/24e

1,198.0

346.0

103.0

0.93

6.5

4.5

09/25e

1,251.0

379.0

121.3

1.02

7.2

4.3

Source: Refinitiv. Note: *Adjusted. **Excluding non-recurring items, mainly COVID-19 financial aid and Belgian flood insurance (2022: €43m; 2023: €4m).

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General disclaimer and copyright

This report has been prepared and issued by Edison. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2024 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

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This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

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