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MELIA HOTELS INTERNATIONAL
MELIA HOTELS INTERNATIONAL
Boosted by prices
08 Nov 16
Melia Hotels international published good 9M results marked by: - a 6.6% increase in consolidated revenue (excluding gains from the Real Estate division) supported by the improvement in the hotel business with a RevPAR increase of 9.9%, of which more than 80% is explained by price increases; - a rise in both EBITDA and EBIT (respectively +9.8% and 14.9%, excluding capital gains and the reversal of onerous contracts); - favourable progress in financial expenses (-43.1%) due to the €240m debt reduction (amortisation of the convertible bond and cash flow generation).
A solid RevPAR increase in the first half and still attractive perspectives
22 Sep 16
H1 16 revenues increased by 5.7% excluding asset sales, and EBITDA by 9.3%. RevPAR (+14.2%) benefited from higher prices mainly in Spain and Portugal. Total net debt decreased by €213m vs December 2015, mainly due to the capital increase (linked to the conversion of convertible bonds) and cash flow generation. The outlook for 2016 is positive thanks to the good evolution in Spain and Mediterranean region which will offset the delicate situation in Paris and the American division. The pipeline is good and in line with the 25 new hotels planned in 2016 and 16,623 new rooms expected in the coming years (+20% in comparison with 2015).
Good FY15 results, attractive perspectives for 2016
08 Mar 16
Hot Hotel business activity… Melia released strong FY15 results, reporting a 16% rise in sales and a 29% jump in EBITDA to €293.1m. The EBITDA margin improved by 170bp from 15.2% to 16.9%. Melia succeeded in offsetting a 14% rise in operating costs, resulting from a change in perimeter, the appreciation of the US dollar against the euro and the devaluation of the bolivar (Venezuela). Rental expenses soared by 14.3% due to the incorporation of new rental hotels. The Hotel business performed strongly, with a 15.1% rise in RevPAR (90% explained by prices, +15.8% excluding Venezuela) and a rise of 218bp in the hotel business margin in Owned & Leased (c.80% of sales, 68% of EBITDA). … not only attributable to resorts The Americas was the best performer (+20.6% in RevPAR), boosted by Mexico (+27.7%) which benefited from strong resorts (the Paradisus Cancun recorded a 35% rise in sales following the rebranding), notably with the Playa de Carmen which contributed $36m to EBITDA in FY15. Such a performance is largely due to a strengthening in RevPAR in Q4 (+33.4%, helped by the adjustment of the Venezuelan bolivar to the SICAD II exchange rate in December 2014 for the full year), which is explained by healthy trends in urban hotels (in premium Spain and Europe) and to the hot resorts in the Caribbean (+18% in RevPAR in Paradisus la Esmeralda) and the Canary Islands (RevPAR +23% in Gran Melia Palacio de Isora vs Q4 14, the resort contributed €17.5m in FY15, 20% above FY14’s). The FY15 performances were also shaped by the strong growth in European cities (+56% and +25% in RevPAR in Melia Milano and Melia Vienna) while Melia Milan has strongly benefited from the Milan World Expo. Urban Spain confirmed its recovery (+17.5% in RevPAR). €216m of debt reduction and lightened cost of debt Net debt was reduced by €216m to €769m (in line with the 2007 level) while the net debt ratio was eased to 2.6x, despite having invested €137m in properties, including the acquisition of a 58.5% stake in the owner of Melia Milano. The financing cost of debt was lowered by €36m to 44% of EBIT (vs 84% in FY14) but the average cost of debt decreased to a moderate 4.36% rate (vs 4.8% and 5.5% in FY14 and FY13 respectively). In 2015, the real estate business was boosted by asset rotation which included the disposal of Melia’s seven largest resorts in Spain (for €178m to a JV 80%-owned by Starwood Capital and 20% by Melia), the sale of the 875-room Calas de Mallorca resort for €23.6m and the 450-room Sol Falco in Menorca for €20m. Melia did not issue any asset disposal targets for FY16.
Q3 15 results above expectations but stretched valuation multiples
10 Nov 15
The 9m 15 results reflected the strengthening of Spanish cities' hotels, with a strong summer season in the Mediterranean. Melia reported a 51% rise yoy in net profit to €52.3m. The Hotel business reported a 10.7% rise in RevPAR (85% explained by prices). FX along with stable costs LFL provided support to the EBITDA which soared by 28.5% yoy to €255m (+15.9% excl. capital gains) while the EBITDA margin gained 209 basis points to 19.3%. America recorded strong RevPAR growth (+4.8% in RevPAR for owned/leased hotels), helped by Mexico (+7.4%) which benefited from remarkable performances at the Playa del Carmen and Paradisus Cancun (+30%) resorts. European cities performed strongly. Italy (+19.7% in RevPAR) was fuelled by Melia Milano (+48%), supported by events, while the UK (+4.2%, RevPAR +25% in ME London) and Germany (+5.9%) proved resilient despite the lack of major trade fairs for the latter. Premium Spain (luxury resorts and urban properties) confirmed the strong momentum in prices seen in Q2. ME Ibiza stood out (+38% in RevPAR, average summer rate per room of €500) while urban properties showed impressive figures (RevPAR +21% in Grand Melia Colon). France stood as an exception with RevPAR collapsing by 20.2% (-2.1% excl. La Defense). The Mediterranean resorts (+6.4% in RevPAR, 100% explained by prices) remained supportive while Spanish hotels also proved buoyant (RevPAR +11.2%) reflecting the continuing recovery in Spain in both the leisure and corporate segments. Recent booking trends point towards a very positive Q4 15 and Melia expects double-digit growth in RevPAR for FY15 (vs single-digit announced in H1, more than 2/3rds explained by prices).
Disappointing operating leverage amidst high market expectations
11 Sep 15
The hotel business helped Melia to report a strong H1 15 publication in terms of trading but the group's EBITDA margin (excl. capital gains) showed a timid improvement. Revenue growth confirmed the recovery of Spanish cities which resulted in a strong pricing power. Group revenue was up 19.2% on the back of an 11.5% rise in hotel RevPAR fuelled by price increases. The Americas (+30% in RevPAR) were buoyed by the Caribbean feeder market (+28.2% in RevPAR in resorts in Dominican Republic) and Mexico (+34.6%, including +37.8% at the Paradisus Cancun). The appreciation of the US dollar against the euro was also a big help. European cities performed strongly with record rates and RevPAR growth seen in Italy (+20% in RevPAR) and the UK (+15% in RevPAR at the ME London in spite of the appreciation of sterling). Premium hotels in Spain (+10% in RevPAR) benefited from the strategy on the luxury segment (+30% in RevPAR Gran Melia Marbella). RevPAR trends were also robust in Madrid (+10.2% in RevPAR due to increased airport business), Seville (+20.2%) and luxury resorts in the Balearics, while Barcelona recovered a positive trend. The Mediterranean region recorded a 7.8% rise in RevPAR (95% explained by price increases), fuelled by Spanish mainland coast hotels (+12.8%). Group underlying EBITDA rose by 22.1% but the EBITDA margin showed a limited improvement from 14% to 14.34%.
05 Dec 16
These interims show LPEs by is ahead of its plan to recruit 360 LPEs by April 2017 and is making impressive progress in Australia. The statement (and we expect the results presentation) provide considerable evidence of Purplebricks’ progress in building its brand, increasing its LPE footprint, developing its technology, creating engaging marketing and selling properties. We leave our forecasts unchanged. Investor confidence in Purplebricks’ ability to deliver sustainable profitable growth should result in share price appreciation towards a valuation based on its results for the year ended April 2019.
Successfully engaging players
06 Dec 16
Stride has a clear focus on online bingo and soft gaming and is growing rapidly, with FY16 l-f-l revenue up 22%. The acquisitions of Tarco and 8Ball at the end of FY16 doubled its share of the UK bingo-led market from 5% to 10% and should deliver material synergies from FY17. Our unchanged FY17 estimates are for 11% EPS growth and strong cash generation. We expect organic growth to be augmented by further accretive acquisitions in due course. Stride’s FY17 P/E is 10.3x and the calendarised EV/EBITDA is only 7.1x, implying considerable share price upside potential.
Small Cap Breakfast
07 Dec 16
Creo Medical group—Schedule 1 update.. £20m raise. Expected market cap £61.2m, admission expected 9 December. ECSC—Schedule 1 from provider of cyber security services. Raising £5m. Vendor sale £0.8m. Target date 14 Dec. Expected market cap £15m. RM Secured Direct Lending - The secured direct lending fund intends to float on the Main Market on 15 December raising up to £100m
Joy of Techs
21 Nov 16
ICT evolution is driven by technological development as advances are made which both meet and shape customer requirements. Our 2011 note No such thing as a telco described the modern reality in that former ‘telcos’ now deliver varying elements of a range of managed services. We built on this theme last year, exploring in further detail their evolutionary paths, operating fundamentals, and cashflow yield similarities. In the consumer environment, demand for bundles of technology is complemented by demand for content. Across the pond, the mooted combination of AT&T and Time Warner typifies the bundled need of ‘pipe’ and content, since unbundled alternatives such as FaceTime and WhatsApp can be easier and clearer to chat over, and Amazon and Netflix are easier to watch anywhere. In the UK, BT’s defensive actions cover delivery, content and capabilities, acquiring EE yet also buying football rights. While TV was long ago added to triple play to become quad play, voice is now merely an app, and fixed and mobile seen as just dumb pipes: it's the content that will influence consumer choices. Growth of TV and film as well as music and gaming over IP leads to UK small cap opportunities. In context of the drive to maximise value from pipes and access by offering content and data, we look at some amongst the potential tech small cap beneficiaries: Amino*, Keyword Studios, ZOO Digital*, 7digital*, KCOM* and CityFibre*.
Conviction List Q4 2016
05 Oct 16
Since its inception in 2010, the Conviction List has outperformed the market in 13 of 18 periods and a reinvested Conviction List would have returned 255% against a Small Companies index that would have returned 130%. Our Conviction List returned 3.7% over the last quarter; this was set against the benchmark UK Small Companies index that returned 11.3% over the same period. Our Q4 portfolio reflects our outlook for a temporary sweet spot for UK growth during the second half of 2016. The downside risk from the uncertainty of the EU Referendum result has been countered by stimulus from the Bank of England, signs of a looser fiscal stance and an 18% YoY reduction in the Sterling Exchange Rate. Compressed corporate fixed income spreads continue to provide a valuation underpin for global equities.