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Does nobody find this share interesting?
The share buyback last week signalling board confidence in the business. Closure of their European Hospitality Real Estate Fund is around the corner and should provide further momentum.
FY 2023 results are a clear beat, with EBITDA margin yet to recover
Key points:
▪ PPHE Hotel Group presented another solid set of results, with total revenues up by c. 25.6% YOY to GBP435.5m (FY 2022:
GBP330.1m) and well above 2019 pre-pandemic revenues of GBP357.7m. Revenues came in c. 1% ahead of KECH and consensus
expectations.
▪ As already reported, the increase in revenues was mainly driven by PPHE’s increase in occupancy to 72.4% (FY 2022: 60%), but
this is still below the pre-pandemic level of 80.6%, while ARR was up c. 4.0% YOY to GBP166.8 (FY 2022: GBP160.4), well above
the 2019 level of GBP128.5. RevPAR also increased by 22.5% YOY to GBP159.6 (FY 2022: GBP130.3) and is 19.4% above the 2019
level of GBP133.7.
▪ EBITDA margin improved by c. 2.3pps but remains c. 3.5pps below the 34.4% level achieved in FY 2019.
▪ EPRA NTA per share increased by 6.7% YOY to GBP26.02 (FY 2022: GBP25.2), demonstrating once again PPHE’s quality portfolio.
▪ Dividend per share proposed of 20p, which brings the total dividend for the year up to 36.0p.
▪ A clear beat to KECH and consensus estimates, which should result in a positive share price reaction. In addition, the company
sees an EBITDA margin improvement within a still positive outlook for FY 2024E.
Investec initiated coverage of Pphe Hotel Group Ltd. with a recommendation of buy.
PT set to 2,820 pence, implies a 125% increase.
Little downside alongside plenty of upside in this share as rates normalise. EBITDA growth relative to capex has been really good over the years and continues to be.
Management: PPHE benefits from having a very experienced management
team, led by the two founders, Eli Papouchado (Non-Executive Chairman) and
Boris Ivesha (President & CEO) who both have decades of successfully
developing and operating hotels and still collectively own 43% of the equity, fully
aligning themselves with shareholders.
▪ Recent trading; results have shown a considerable improvement since Covid,
with a number of consensus upgrades across this year. We still see upside
though, especially in terms of occupancy levels and the EBITDA margin
▪ Next event; PPHE usually issues a year-end trading update in January. PPHE’s
Q3 trading update, issued in October, was positive saying that “trading
momentum seen in Q3 has continued into the final quarter, supported by
capacity for further growth in occupancy”. Trading comments from other
European hotel companies since the Q3 statement have been encouraging.
▪ Valuation: PPHE’s share price of £12.55 is half the value of the FY22 European
Real Estate Association (EPRA) Net Reinstatement Value (NRV) of £25.17,
which itself does not include other assets such as undeveloped land and the
profits from the management platform. Our illustrative fair value model
suggests a fair value of £25.66 per share. The Group trades on a FY25 PER of
just 9.1x, the cheapest of the European hotel peers, despite a materially better
upgrade trend. The shares have recovered in recent weeks and we note the
recent inclusion in the FTSE 250 index, which will aid liquidity.
Good to see the share price rising again, supported by moderating 10 year gov bond yields. Still much undervalued.
Thank you Smooth Operator. Very much appreciated. It does seem we are valued way below fair value here and after a little up we are back down again. Seems weird to me we are not near broker values of £16 to £20. I guess more patience needed.
Well there you go, Berenberg has just raised their EPS estimate for 2024 by +18% and 2025 by +10%. Did I not tell you so!
Thought I would point out that the near-term pipeline of hotel projects will deliver £25m of EBITDA as per the results release, which is equates to a 20% increase in 2023 guided EBITDA. On top of that, we can expect occupancy to continue to recover and RevPAR to grow at least in line with inflation, probably beyond inflation if current trends remain.
Consensus forecasts for EBITDA in 2024 and 2025 are £140m and £157m, respectively. Too pessimistic! A 10% yearly growth in EBITDA to 2025 + £25m EBITDA from new projects = £170m in EBITDA, which is a CAGR of 14%. Easily achievable in my view. The street will have to raise their forecasts.
The equity is currently being valued at £460m today. Such a low valuation on the stock doesn't make sense.
In my view, £170m of EBITDA @ a pessimistic cap rate or yield of 7.0% suggests a gross value of assets of £2.43bn. That is in line with the valuation under EPRA methodology, as it happens. Seems very fair to me, for growth assets with inflation protection. So the EPRA NRV per share number is absolutely FAIR and LEGITIMATE.
The realistic value for this stock is £25.
This is an asymmetric risk-reward opportunity in my view. With a diversified and high quality asset base, downside is basically minimal. That leaves >100% upside opportunity.
The EPRA NRV per share, which stands for "European Public Real Estate Association Net Reinstatement Value per share," is a financial metric used in the real estate industry to assess the net value of a company's real estate assets. It takes into consideration the market value of properties owned by the company, minus any liabilities, and then divides that value by the number of shares outstanding.
· EPRA NRV per share* at 30 June 2023 was flat at £25.05 (31 December 2022: £25.17), driven entirely by the change in the GBP/EUR currency conversion rate. Revaluations will be completed at the year end, as per usual course of business.
I am familiar with NAV/PS = Net Asset value per share (Tangibles + cash - liabilities). But not familiar with EPRA NRV £25……Is that roughly the same thing or not related does anyone know?
Their return to dividends and/or other capital return is great news
Trades usually start slow here and build up in the afternoon, perhaps it's the US investors but the trades are a good size.
Remarkable results all the same.
Massive results today, should see a big rise!
Company is looking very strong coming off the 52 week low.
For 15k
Decent buys already, remarkable RNS results still close today 52 week low plenty of upside to come.
Big results, market will take notice, blue day inbound.
Amazing results with 52 week low just last week at 10,000.00p hardly anything is priced in!
Total Revenue: Total revenue for the first half of 2023 was £180.0 million, a substantial increase of 59.0% compared to the same period in 2022, which reported revenue of £113.2 million.
EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization): EBITDA in the first half of 2023 was £45.2 million, showing a remarkable increase of 165.7% over the EBITDA of £17.0 million reported in the same period in 2022.
Adjusted EPRA Earnings: Adjusted EPRA Earnings for the twelve months ended June 2023 were reported at 106 pence, indicating a substantial growth of 112% compared to the 50 pence reported in 2022.
RevPAR (Revenue per Available Room): RevPAR for the first half of 2023 stood at £110.3, which is significantly higher than the RevPAR of £67.8 reported for the same period in 2022.
Occupancy Rates: The recovery in occupancy rates continued, with H1 2023 showing an occupancy rate of 69.1%, compared to 48.0% in H1 2022.
Room Rate Growth: Average room rate in the first half of 2023 was £159.6, showing a growth of 13.1% over the same period in 2022.
Total Revenue: Total revenue for the first half of 2023 was £180.0 million, a substantial increase of 59.0% compared to the same period in 2022, which reported revenue of £113.2 million.
EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization): EBITDA in the first half of 2023 was £45.2 million, showing a remarkable increase of 165.7% over the EBITDA of £17.0 million reported in the same period in 2022.
Adjusted EPRA Earnings: Adjusted EPRA Earnings for the twelve months ended June 2023 were reported at 106 pence, indicating a substantial growth of 112% compared to the 50 pence reported in 2022.
RevPAR (Revenue per Available Room): RevPAR for the first half of 2023 stood at £110.3, which is significantly higher than the RevPAR of £67.8 reported for the same period in 2022.
Occupancy Rates: The recovery in occupancy rates continued, with H1 2023 showing an occupancy rate of 69.1%, compared to 48.0% in H1 2022.
Room Rate Growth: Average room rate in the first half of 2023 was £159.6, showing a growth of 13.1% over the same period in 2022.
52 week low was last week at 1,000.00, so there's next to nothing priced in for these results!
Should be fun tomorrow!
Expecting a decent rise tomorrow as they generated higher revenues than pre-covid. Q3 the the strongest trading period will be even better.
'it is now anticipated that H1 2023 revenue will be in excess of £177 million (vs £155 million pre-Covid H1 2019) and REVPAR is anticipated to be around £109 (vs £93 pre-Covid H1 2019).'
'The strong trading conditions and forward booking momentum announced in the Q1 trading update, published on 27 April 2023, have been maintained through Q2 and into Q3 across all main market segments'
Last hour to buy in now approaching!
Good luck to those already invested.
Going to have some fun here tomorrow!
A couple of decent size buys, follow the money!