HOTC's first FY results since IPO welcomed by investors

Companies: Hotel Chocolat Group

After its IPO last May, Hotel Chocolat (AIM: HOTC) delivered its first FY Results as a listed company this morning. Growth in revenues was strong, as expected, with a 12% rise year-on-year to £91m. Earnings growth and operational leverage was huge as EBITDA, PBT and earnings rose 57% to £12.3m, 181% to £8.2m and 229% to £6.7m respectively. All revenue channels have grown over the period but growth in Digital sales is particularly strong at 20%.

Store openings have accelerated with net 4 opened during the year, 3 since period end and a further 5 expected in time for the highly important Christmas period. The upcoming festive period could be a huge opportunity for HOTC and its accelerated store openings combined with the increased brand awareness brought by the IPO earlier this year should put it in a good position to capitalise on its current momentum. Management appear well prepared in this regard:

"Our plans for the peak winter season are well set and I am confident that our Christmas ranges will be our best ever"

Liberum published a confident note this morning following the results upgrading their forecasts after the greater than expected number of store openings.

Looking at valuation, Hotel Chocolat certainly enjoys a premium rating in the market with 2016 PE ratio of c. 34x, an EV/EBITDA of c.20x and EV/Sales of just under 3x. However when you compare it to the universe of high growth peers with strong and growing digital platforms (eg ASOS, Boohoo, Patisserie Valerie) the multiples don't look onerous.

CEO and co-founder Angus Thirlwell strikes a confident tone in his statement:

"I am very pleased with our performance since we were admitted to trading on AIM in May this year.  Our results are strong, the Hotel Chocolat brand has continued to strengthen and we have made good progress with our three strategic priorities of investing further in our British chocolate manufacturing operations, growing our store estate and developing our digital offering." 

The shares opened up 7% in early trading and have risen over 20% since their IPO back in May 2016.

The information contained within this post is based on personal experience and opinion and should not be considered as a recommendation to trade nor financial advice.