Hostmore — Ready to party

Hostmore (LSE: MORE)

Currency in GBP

Last close As at 25/01/2023

GBP0.12

−0.36 (−2.82%)

Market capitalisation

GBP16m

Research: Consumer

Hostmore — Ready to party

Hostmore has bucked concerns about the impact of the Omicron variant with its expectation of FY21 pre-IFRS 16 EBITDA ‘well ahead of £18.6m market consensus’. While buoyancy in October and November was the driver, December proved resilient with cancellations owing to COVID-19 concerns more than made up by walk-ins and new reservations. We are therefore raising our FY21 forecast of EBITDA (our key metric) by £2m and revenue by £10m. For the current year the newly confirmed imminent easing of COVID-19 restrictions should spur the benefit of Fridays’ wide-ranging brand initiatives and growth opportunities in a favourable property market. Hostmore’s meagre rating of under 6x FY22e EV/EBITDA belies such positives and is low against an average of c 10x for its peers.

Richard Finch

Written by

Richard Finch

Analyst, Consumer

Consumer

Hostmore

Ready to party

Trading update

Travel & leisure

26 January 2022

Price

101p

Market cap

£128m

Net bank debt (£m), adjusted for COVID-19 accruals, at August 2021

36

Shares in issue

126.1m

Free float

100%

Code

MORE

Primary exchange

LSE

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(9.2)

NA

NA

Rel (local)

(8.0)

NA

NA

52-week high/low

134p

95p

Business description

Hostmore has been newly formed to provide a platform for the development of hospitality brands. Its current operations are Fridays, a UK nationwide chain of American-styled casual dining restaurants (85 sites), and 63rd+1st, a new cocktail-led bar and restaurant brand (three sites).

Next events

2021 final results

March 2022

Analysts

Richard Finch

+44 (0)20 3077 5700

Russell Pointon

+44 (0)20 3077 5700

Hostmore is a research client of Edison Investment Research Limited

Hostmore has bucked concerns about the impact of the Omicron variant with its expectation of FY21 pre-IFRS 16 EBITDA ‘well ahead of £18.6m market consensus’. While buoyancy in October and November was the driver, December proved resilient with cancellations owing to COVID-19 concerns more than made up by walk-ins and new reservations. We are therefore raising our FY21 forecast of EBITDA (our key metric) by £2m and revenue by £10m. For the current year the newly confirmed imminent easing of COVID-19 restrictions should spur the benefit of Fridays’ wide-ranging brand initiatives and growth opportunities in a favourable property market. Hostmore’s meagre rating of under 6x FY22e EV/EBITDA belies such positives and is low against an average of c 10x for its peers.

Year end

Revenue (£m)

EBITDA
reported (£m)

EBITDA
pre-IFRS 16 (p)

PBT*
(£m)

EPS
(p)

EV/reported EBITDA (x)

12/19

214.8

45.5

25.6

7.4

N/A

N/A

12/20

129.1

23.5**

1.7**

(12.2)**

N/A

N/A

12/21e

160.0

37.0**

20.5**

1.8

1.2

8.2

12/22e

242.0

50.5

29.5

15.0

10.2

5.7

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.

Omicron resilience in December

Confirmation of revenue for December down only 8% on 2019 was welcome, given the hit to consumer confidence in a key period from stricter COVID-19 restrictions and government messaging. This was not out of kilter with the restaurants market, as per the Coffer CGA Business Tracker, which saw a 4% reduction after consistent 2021-on-2019 monthly growth since full reopening. Guest cancellations at Hostmore were more than offset by new reservations and walk-ins rather than re-bookings as group reservations tend not to be significant.

Increased FY21 forecasts reflect strong start as PLC

With ‘EBITDA for October and November 2021 ahead of 2019’ per the 8 December trading update and December holding up despite Omicron, if less than originally envisaged, Hostmore is set to deliver pre-IFRS 16 EBITDA ‘well ahead of £18.6m market consensus’. Our raised FY21 forecasts, as detailed on page 2, show a £2m rise in EBITDA at a maintained margin on £10m higher revenue, driven by dine in as guests were encouraged to come in house owing to a better marketing/upselling opportunity. Admin costs have been pared slightly by further COVID-19 landlord concession agreements, while we now expect net bank debt at end 2021 to be £25m (previously £29.5m) thanks to good trading. Macro uncertainties currently suggest maintained forecasts for FY22, but the imminent lifting of Plan B restrictions may give scope to increase.

Valuation: Unduly low

An EV/EBITDA multiple of under 6x in FY22e both fails to recognise Fridays’ rejuvenation prospects in likely improving conditions and stands at an excessive discount to that of its peers, which we estimate to be on c 10x.

Revenue and profit analysis

Exhibit 1: Revenue and EBITDA analysis

Year end 31 December (£m)

2019

H120*

H220**

FY20***

H121****

H221e

FY21e

FY22e

Sites (period end)

87

85

85

85

87

88

88

94

Revenue

Existing (80 sites)

193.2

46.0

67.0

113.0

34.7

105.9

140.5

201.5

Change

+2%

N/A

N/A

-42%

-25%

+58%

+24%

+54%

Additions (sites)

14.9 (9)

5.5

8.7

14.2 (9)

4.6

13.4

18.0(13)

40.5 (19)

Disposals

7.2

1.1

0.7

1.8

0.5

0.5

1.0

-

Other

(0.4)

(0.2)

0.3

0.1

0.2

0.3

0.5

-

Dine in

211.7

45.9

68.7

114.6

28.7

115.8

144.5

229.0

Change

+3%

-46%

-38%

+69%

+26%

+59%

Dine out

3.1

6.4

7.7

14.1

11.0

4.0

15.0

12.5

Change

+13%

X4

+72%

-48%

+6%

-17%

Other

-

Neg.

0.4

0.4

0.2

0.3

0.5

0.5

Total

214.8

52.4

76.7#

129.1#

39.9#

120.1#

160.0#

242.0

Gross Profit

168.1

40.7

62.2

102.9

32.2

95.8

128.0

190.0

Margin

78%

78%

81%

80%

81%

80%

80%

79%

Admin expenses

(122.8)

(51.1)

(48.9)

(100.0)

(40.6)

(65.7)

(106.3)

(140.0)

Share of revenue

57%

98%

64%

78%

102%

55%

66%

58%

Other income:

- Government grants

-

11.9

7.2

19.1

14.8

-

14.8

-

- Other

0.2

Neg.

1.5

1.5

0.1

0.4

0.5

0.5

EBITDA

Reported

45.5

1.4

22.1

23.5

6.5

30.5

37.0

50.5

Lease expenses

(20.2)

(11.0)

(9.5)

(20.5)

(9.5)

(6.5)

(16.0)

(21.0)

Other

0.2

Neg.

(1.5)

(1.5)

(0.3)

(0.2)

(0.5)

Neg.

Pre-IFRS 16

25.6

(9.5)

11.2

1.7

(3.3)

23.8

20.5

29.5

Margin, before govt grants

11.9%

-

5.2%

-

-

19.5%

3.3%

12.2%

Source: Company data, Edison Investment Research. Note: *National lockdown from 20 March to 28 June; **National lockdown from 5 November to 2 December; ***245 days’ trading; ****National lockdown from 1 January until 26 April in Scotland and 17 May in England; #Boosted by VAT reduction from 20 July 2020 and menu price increases.

Exhibit 1 shows our FY21 forecasts, revised following Hostmore’s 17 January trading update. The principal changes are as follows:

6% increase in revenue and pre-IFRS 16 EBITDA.

We now expect PBT to be positive at £1.8m (previously -£0.2m).

Year-end net bank debt (see Exhibit 2) £25m (previously £29.5m) for FY21e and £21.5m (previously £26m) for FY22e.


Exhibit 2: Financial summary

£'000s

2019

2020

2021e

2022e

31-December

IFRS

IFRS

IFRS

IFRS

INCOME STATEMENT

Revenue

 

 

214,800

129,100

160,000

242,000

Cost of Sales

(46,700)

(26,200)

(32,000)

(52,000)

Gross Profit

168,100

102,900

128,000

190,000

EBITDA pre-IFRS 16

 

 

25,600

1,700

20,500

29,500

EBITDA

 

 

45,500

23,500

37,000

50,500

Normalised operating profit

 

 

20,600

200

14,800

28,000

Amortisation of acquired intangibles

0

0

0

0

Exceptionals

1,600

(8,000)

0

0

Share-based payments

0

0

0

0

Reported operating profit

22,200

(7,800)

14,800

28,000

Net Interest

(13,200)

(12,400)

(13,000)

(13,000)

Joint ventures & associates (post tax)

0

0

0

0

Exceptionals

0

0

0

0

Profit Before Tax (norm)

 

 

7,400

(12,200)

1,800

15,000

Profit Before Tax (reported)

 

 

9,000

(20,200)

1,800

15,000

Reported tax

(2,000)

2,900

1,200

(2,000)

Profit After Tax (norm)

5,400

(9,300)

1,500

12,800

Profit After Tax (reported)

7,000

(17,300)

3,000

13,000

Minority interests

0

0

0

0

Discontinued operations

0

0

0

0

Net income (normalised)

5,400

(9,300)

1,500

12,800

Net income (reported)

7,000

(17,300)

3,000

13,000

Average number of shares outstanding (m)

N/A

N/A

126

126

EPS - normalised (p)

 

 

N/A

N/A

1.19

10.15

EPS - diluted normalised (p)

 

 

N/A

N/A

1.19

10.15

EPS - basic reported (p)

 

 

N/A

N/A

2.38

10.31

Dividend (p)

0.00

0.00

0.00

0.00

Revenue growth (%)

N/A

(39.9)

23.9

51.3

Gross Margin (%)

78.3

79.7

80.0

78.5

EBITDA Margin (%)

21.2

18.2

23.1

20.9

Normalised Operating Margin

9.6

0.2

9.3

11.6

BALANCE SHEET

Fixed Assets

 

 

341,400

321,300

310,000

304,000

Intangible Assets

146,000

146,000

146,000

146,000

Tangible Assets

192,300

170,100

159,000

153,000

Investments & other

3,100

5,200

5,000

5,000

Current Assets

 

 

36,200

46,100

51,000

54,000

Stocks

1,300

700

1,500

1,500

Debtors

7,600

6,500

8,000

8,500

Cash & cash equivalents

27,100

37,200

39,500

42,000

Other

200

1,700

2,000

2,000

Current Liabilities

 

 

(35,300)

(51,700)

(45,700)

(37,400)

Creditors

(6,400)

(13,400)

(8,500)

(5,000)

Tax and social security

(4,800)

(6,000)

(6,000)

(6,000)

Lease liabilities

(12,700)

(17,700)

(18,000)

(14,500)

Short term borrowings

(1,100)

(1,400)

(1,500)

(1,500)

Other

(10,300)

(13,200)

(11,700)

(10,400)

Long Term Liabilities

 

 

(209,700)

(200,400)

(197,000)

(189,000)

Lease liabilities

(144,800)

(133,800)

(131,000)

(124,000)

Long term borrowings

(64,900)

(63,900)

(63,000)

(62,000)

Other long-term liabilities

0

(2,700)

(3,000)

(3,000)

Net Assets

 

 

132,600

115,300

118,300

131,600

Minority interests

0

0

0

0

Shareholders' equity

 

 

132,600

115,300

118,300

131,600

CASH FLOW

Op Cash Flow before WC and tax

45,500

23,500

37,000

50,500

Working capital

2,500

11,500

(9,500)

(4,000)

Exceptional & other

3,100

(700)

0

0

Tax

(1,600)

(1,000)

0

(1,000)

Operating cash flow

 

 

49,500

33,300

27,500

45,500

Capex

(11,300)

(3,700)

(5,000)

(11,000)

Acquisitions/disposals

0

0

0

0

Net interest

(26,200)

(17,700)

(18,000)

(26,000)

Equity financing

0

0

0

0

Dividends

0

0

0

0

Other

(1,400)

(1,100)

(1,400)

(5,000)

Net Cash Flow

10,600

10,800

3,100

3,500

Opening net debt/(cash)

 

 

49,500

38,900

28,100

25,000

FX

0

0

0

0

Other non-cash movements

0

0

0

0

Closing net debt/(cash)

 

 

38,900

28,100

25,000

21,500

Lease liabilities

157,500

151,500

149,000

138,500

Closing net debt/(cash) including IFRS 16 lease liabilities

196,400

179,600

174,000

160,000

Source: Company accounts, Edison Investment Research

General disclaimer and copyright

This report has been commissioned by Hostmore and prepared and issued by Edison, in consideration of a fee payable by Hostmore. 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 2022 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.

United Kingdom

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.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Hostmore and prepared and issued by Edison, in consideration of a fee payable by Hostmore. 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 2022 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.

United Kingdom

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.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

More on Hostmore

View All

Consumer

Hostmore — Back on track

Consumer

Hostmore — Ready to party

Consumer

Hostmore — Delivering on its plans

Consumer

Hostmore — Full menu!

Latest from the Consumer sector

View All Consumer content

Research: TMT

Technicolor — Robust demand with fulfilment issues

Technicolor is on track to meet FY21 and FY22 management guidance (maintained at the Q3 results in November) on EBITDA and EBITA, despite supply constraints resulting from the pandemic, and our forecasts for these were unchanged. Demand in both Technicolor Creative Studios (TCS) and Connected Home remains robust, with financial performance constrained in the former by industry talent shortages and in the latter by continuing industry componentry supply issues. With planned cost savings tracking to plan, the shift is continuing back towards the equity, which now represents 35% of the enterprise value. We would expect that a return to focus on the operations should lead to a higher valuation.

Continue Reading

Subscribe to Edison

Get access to the very latest content matched to your personal investment style.

Sign up for free