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The termination of the Hodges Bay management contract has no impact on forecasts. While unfortunate, issues at the resort, which has resulted in the construction not yet complete have frustrated matters.
Elegant Hotels Group
As discussed at the time of the recent interims, the Group’s debt facilities have been refinanced. The terms remain similar to that of the previous facilities though the remaining repayment period of the term loans has been extended from 10 years to 15 years.
Elegant has this morning announced H1 results that should position it well to deliver market expectations. There was a marginal decline in ADR offset by slightly higher levels of occupancy, delivering a 1.0% increase in RevPAR. We are tweaking down our forecasts to move in line with the lower end of the consensus range to reflect a tougher rate environment driven by increased competition in the all-inclusive segment of the market as well as increased VAT. That said, we believe the shares represent good long-term value, trading at a 54% discount to NAV, with a yield of 5.7%.
Interims are in line with expectations noting a resilient and stable performance YoY. Visitors from the UK grew 7.0% in the year with all-inclusive product outperforming and growth from the US remains robust.
FY18 results show that management has delivered a solid performance for the year-ended Sep 2018. The market and the Group’s performance stabilised in H1'18 and delivered on a strong pipeline of bookings in H2.
Elegant has announced FY 2018 results that show good progress vs. last year and are within 3% of our forecasts at the adjusted EBITDA level, and ahead at the adjusted EPS level albeit due to lower tax. The Group is trading in line with expectations in FY 2019 with over 60% revenue visibility for 2019E. We increase our adj. EPS forecast by 12% and 13% in FY19 E and FY20E which is largely driven by changes to corporate tax rates in Barbados. We continue to believe the shares offer strong value.
Elegant offers a 6% dividend yield, and is trading at a 60% discount to NAV. Confirmation that FY18E is likely to meet expectations should be seen positively but the fact that bookings for FY19E are trending ahead of the same period last year is positive.
Elegant has delivered a short but robust trading update, which confirms it continues to trade in line with expectations. Encouragingly, booking trends are also ahead of last year as we enter the peak trading period. We are maintaining our forecast assumptions on the back of this, and believe the valuation, asset backing, and yield look attractive.
We note the recent weakness in the company’s share price, which is down 18% since the interim results and now at the lowest point since December 2016 when the shares were recovering from a c.30% downgrade to forecasts as the company faced a variety of trading headwinds post Brexit. In our view, the market is beginning to stabilise and the current share price, which is significantly below the recently mooted bid price of 110p and at a large discount to the sector, represents significant value. In our view, trading patterns are now beginning to stabilise and we believe the shares offer good long-term value at this level given the NAV of 147p per share (GBP:USD of 1.35), attractive yield of 5.7% and undemanding multiples at a significant discount (c.50%) to the sector. We expect a trading update from the company in the first week of October.
Elegant offers a 9% FCF yield, 5% dividend yield, and is trading at a 40% discount to NAV. The group has seen improvement in occupancy in all its hotels and revenue visibility for the rest of the year sits at 95%, with greater confidence in the outlook vs. the same time last year.
Elegant has this morning announced H1 results that should position it well to deliver our FY expectations. YoY improvements have been delivered across most KPIs and the company has confirmed trading is in line with expectations, we are therefore leaving our full year forecasts. We believe the shares represent good long-term value, trading below IPO price and at a 41% discount to NAV, with a yield of 4.7% which remains ahead of the sector average with solid cover in excess of 2.3x.
Elegant has delivered solid final results, which are 2% ahead of our forecasts at the adjusted EPS level. We are lowering our forecasts to reflect recent investment. Despite the uptick in debt following this investment, the current NAV of 163p should give some support. The dividend has also been rebased to 4.0p per annum from 2018E, albeit the yield on this in excess of 4% remains ahead of the sector average with solid cover in excess of 2.3x.
The proposed bid that was reported in the press this weekend was at a rumoured £100m. On our calculations this puts the offer at a discount to NAV and our NAV is very prudent indeed.
Trading is in line with expectations and the start of FY18E has been encouraging. There is no change to forecasts and confidence in our middle of the range FY17E numbers is high.
Elegant has this morning released an encouraging trading update essentially confirming the company continues to trade in line with market expectations. The company has also confirmed that the Treasure Beach Hotel is on track to reopen for business at the start of the peak tourist season and that bookings for the current financial year are tracking ahead of last year. The Company intends to announce its full year results for the year ended 30 September 2017 on Tuesday 9 January 2018. We remain comfortable with our FY expectations and are therefore leaving these unchanged. We believe the shares represent good long-term value trading at a c.54% discount to NAV (175p).
Considering the macro concerns at the start of the year, the interim results are commendable. The business is in a stronger position now following four deals since IPO, and with investment into the existing estate rising, we see multiple reasons for optimism.
Elegant has this morning announced H1 results that should position it well to deliver our FY expectations. The YOY movements on most metrics are down as anticipated, and is due to a deterioration of trading conditions which was well flagged last year. That said, we remain comfortable with our FY expectations and are therefore leaving these unchanged. We believe the shares represent good long term value trading at a c.50% discount to NAV with a sector leading 7.9% yield (1.2x dividend cover) at the current price.
Elegant has this morning announced it has entered into a conditional agreement to acquire the issued share capital of Treasure Beach Ltd, including the business, the freehold property and assets of Treasure Beach Hotel in Barbados. The company estimates the total consideration plus refurbishment costs will total $10.5m, implying a normalised ROCE on the new asset of 10.2% based on past tax earnings (12.8% pre-tax). We expect the acquisition to be marginally dilutive to earnings in 2017 (-2.1%) due to timing, before generating 4.3% and 7.2% uplifts in earnings in 2018E and 2019E respectively. The group now controls a continuous 300 metre stretch of the Barbados prestigious ‘Platinum Coast’.
Final results are broadly in line with our revised forecasts on most headline levels in what proved to be a difficult year for the Group. That said, it has significantly increased room capacity, which is now +40% ahead at the time of the IPO (+14.5% yoy), which improves its competitive position and offering. We are maintaining our headline forecasts, and with the dividend expected to be held for the foreseeable future producing an 8.7% yield with a NAV in excess of 180p, we continue to believe there is strong long term value offered at present.
As indicated in October Elegant Hotels has completed on a management contract with a prime property where we would expect them to put their unique stamp on. This is a positive strategic step that will expand the business in an asset light way and potentially improve the quality of earnings. We continue to believe the shares look attractive from a valuation, NAV and dividend yield perspective.
Elegant has released a trading update confirming that it is trading in line with 2016 expectations. The dividend has been maintained, which is currently yielding 11% (trough cover of 1.2x 2017). The NAV is 184p, which also provides significant freehold asset support. However, we are reducing our 2017 and 2018 forecasts, which drives an 6% reduction in REVPAR in 2017 vs. our previous assumptions and is largely occupancy driven. We also factor in additional corporate costs to support the growth with the room count +35% since IPO factoring in Waves and its latest management contract.
Elegant Hotels have announced this morning the soft opening of the recently acquired Waves Hotel and Spa with full opening to follow in 2-3 months, which is in line with the original plan. This was the company’s first acquisition since listing in May 2015 and we think this will represent a good example of the company’s ability to enhance returns from assets by refurbishing, repositioning and repricing. At the current price the shares have significant asset backing with a NAV of 157p per share vs the current share price of 69p with a dividend yield of 10%, which management are committed to paying to September 2016.
Elegant has shown modest YOY progress at its H1 results, albeit the trading environment has become more challenging and deteriorated further going into H2 2016. We have downgraded our forecasts accordingly, which is disappointing in the short term. However, we believe the Group has significant asset backing with an adjusted NAV of 157p, while management remain committed to the FY dividend of 7.0p, which is currently yielding 7.1%.
Elegant has announced the acquisition of Waves Hotel and Spa (Waves) in Barbados for a total consideration of $18m. This will be financed via debt, and we anticipate this to be EPS enhancing during the first full year of ownership post re-opening. This marks the first transaction of its consolidation strategy post IPO, and we believe this should mark the beginning of an exciting growth phase for the Group.
Elegant has delivered solid final results, which are some 4% ahead of our forecasts at the adjusted EPS level. We are maintaining our headline forecasts on the back of these results, but believe our average daily rate (ADR) assumptions remain highly conservative. At current levels the shares look highly attractive backed with a growing discount to NAV, a sector leading dividend yield and ambitious growth strategy.
Elegant has delivered a solid trading update and is trading in line with expectations at the PBT level as it enters into its key trading period. Airlift capacity from the US is increasing and is also steady from the UK, which should bode well for ADR growth further down the line. We believe the shares look good value and well underpinned as the share price discount to NAV continues to grow.
A leading luxury hotel owner and operator based in Barbados, Elegant Hotels is a unique investment opportunity, which gives investors the opportunity to purchase an asset backed growth story with an attractive dividend yield against a backdrop of improving market conditions. The assets are well invested following a significant capital expenditure refurbishment programme, and we anticipate high levels of cash conversion (c90% through to 2017E) backed with post tax ROCE of 13% (incorporating some build-up of cash) vs. its estimated WACC of 9%. Elegant is also backed by a talented and proven management team that has done a phenomenal job of driving EBITDA towards $20m as it benefits from highly effective systems and processes firmly embedded into the group. At current levels Elegant trades on an attractive 2015E P/E of 11.4x based on conservative forecasts using current FX rates and an EV/EBITDA of 9.0x. These multiples fall in future years as organic growth filters through and is underpinned by a dividend yield of 6%.
