PPHE Hotel Group

LN: PPH

£784.4m market cap

1870p last close

PPHE Hotel Group is principally an integrated owner and operator of upscale and lifestyle hotels in gateway cities and regional centres as well as hotels, resorts and campsites in select resort destinations.

Investment summary

In keeping with its strong record of asset development, PPHE is actively repositioning itself at the corporate level. The introduction of EPRA reporting highlights the company’s success from a property perspective (EPRA NAV per share of £24.57 at December 2018), while share liquidity and broadening of the investor base should benefit from the recent move to a Premium Listing and inclusion in the FTSE 250 Index. Operationally, progress is robust with resilient trading (8% gain in Q1 like-for-like RevPAR and
revenue), continued material investment payoff and abundant asset acquisition opportunities. We believe PPHE’s shares offer an attractive way to access hotel property markets, both in terms of capitalisation yield and a SOTP valuation.

Y/E Dec
Revenue (£m)
EBITDA (£m)
PBT (£m)
EPS (fd) (p)
P/E (x)
P/CF (x)
2017A 325.1 107.3 34.5 64.2 28.8 6.8
2018A 341.5 113.2 40.2 77.5 23.9 7.3
2019E 350.0 118.0 41.5 74.5 24.8 6.6
2020E 365.0 122.5 46.0 83.5 22.2 6.4
Last updated on 24/07/2019
Industry outlook

Security and Brexit uncertainty are concerns, but the London hotel market has shown admirable resilience (ytd RevPAR +2%, per STR) and benefits from increased tourism owing to sterling weakness. Greater measurable worries are room supply, which is above its long-term trend, slower economic growth and rising operating costs. GL, London’s largest hotel owner/operator, continues to “maintain a cautious outlook”, while, per pwc, 2019 market RevPAR gain may be marginal.

Last updated on 24/07/2019
Sector
Consumer
Share price graph
Balance sheet
Forecast net debt (£m) 508
Forecast gearing ratio (%) 97
Price performance
%
1m
3m
12m
Actual 2.8 10.8 23.3
Relative* 1.6 10.2 26.8
52-week high/low 1990.0p/1490.0p
*% relative to local index
Key management
Eli Papouchado Chairman
Boris Ivesha CEO
Daniel Kos CFO

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