Leisure, Tourism & Travel

Leisure, Tourism & Travel equity research

Explore the most viewed and latest equity research and media content for companies within the Leisure, Tourism & Travel sector. Companies that operate in this sector provide goods and services related to: airlines, gambling, hotels, tourism, leisure & entertainment.

Leisure, Tourism & Travel

Explore the latest equity research and media content for companies within the Leisure, Tourism & Travel sector. Companies that operate in this sector provide goods and services related to airlines, gambling, hotels, tourism, leisure & entertainment.

16 Oct 17

Shopping Trolley

We examine wet-led and food-led capacity across the regions and conclude that excess capacity remains in the food-led segment (although Central, Welsh and Yorkshire regions lag the national average). Despite recent profit warnings, an increasing divergence in reported performance between pubs and restaurants, and a recent reduction in eating out frequency and spend, existing food-led operators remain too focused, in our view, on trimming estate tails and slowing rollout rather than substantial capacity reduction – and combined with smaller PE-backed concepts scaling up and landlord pragmatism, net new capacity continues to enter the market. Given the severe cost and competitive pressures, as well as downside macro risks, we foresee more pain across the sector – in the near term expect aggressive menu price discounting to continue, leading subsequently to margin pressure and forecasting risk for listed operators and financing risk for smaller, highly leveraged private operators. While rightsizing will happen (it did with pubs), the process may be protracted. We run the finnCap Slide Rule over the casual dining space, with our preferred pick (BUY, 19p PT) scoring highest on QVGM metrics. While not immune to sector woes, lacks an estate tail, should be a beneficiary of trading down, and has a number of self-help levers, as well as a management team that has seen the movie (many times) before.

Companies: BOTB FUL HOTC IDP JOUL CAKE PHTM RGD RBG SCS SHOE

19 Oct 17

Panmure Morning Note 19-10-2017

UK revenue has accelerated dramatically in H2 to 26% with positive margin progress. International markets revenue growth is 70% in H2, supporting the announcement of a third international market in Denmark. The Sunshine acquisition is performing to plan and Monarch disruption is being managed well. FY17 adjusted PBT is expected to be in line with Board expectations (PG £28m, +31% YoY) and OTB has exited FY17 with strong momentum.

Companies: On The Beach Group

05 Oct 17

Conviction List Q4 2017

Since its inception in 2010, the Panmure Gordon Conviction List has outperformed the market, returning 278% against a Small Companies index that would have returned 232% over the same period. Our Q4 portfolio reflects our view that the UK equity market stands to benefit from a coordinated upturn in global growth. Low nominal fixed income spreads continue to provide a valuation underpin for global equities. There are increasing signs that the world’s central bankers are making a concerted effort to wean markets off near zero interest rates. However with global debt exceeding 200% of GDP and unfavorable demographic trends, we think their chances of rapid progress are slim.

Companies: CPI CTH CINE JE MJW NOG RPC VM/ XAR

17 Oct 17

Weak peak summer trading

Summer trading weaker than expected, not helped by external events. A 3% downgrade is not ideal, but non disastrous and capex rebalancing will support continued NBD momentum, as will new IP initiatives and the proposed LLP New York. We would regard a sharp share price reaction (>5%) as a good entry point to one of the highest quality portfolios in the sector. BUY.

Companies: Merlin Entertainments

26 Sep 17

Support Group

Since our first quarterly at the end of 2015, 12 of the 59 companies we included in our valuation tables have been bid for. Given those tables were simply designed to show the range of companies present within the sector, not a hit-list of undervalued opportunities, the fact that 20% of them have been taken over is worth looking at in more detail. At a time when warnings and share price collapses from the likes of Interserve, Carillion, MITIE, DX and Capita and Serco have dominated newsflow, it should be remembered that the sector is broad and highly varied both in terms of business model and performance. If the troubles of a minority of the sector drag down wider valuations then the evidence is that there is an army of potential bidders (reinforced by the weakness of sterling) ready to take advantage.

Companies: FOUR ACL BOOT CLL CMS CNCT FCRM LOK PPH RNWH SVCA STAF UTW WATR VANL WYG

18 Oct 17

Backing a winner

A flex of strategy and capital allocation was overdue. Ideally this would have been delivered preemptively, not alongside weak trading, but better late than never. Questions whether external factors are masking company-specific concerns are legitimate but overblown, and will take time to dispel. Reallocated capex sees Merlin backing its winners (accommodation, IP, LEGOLAND Parks). We feel management has earned the credibility to be backed too, and retain a BUY rating with TP lowered to 470p on FY17-19 EPS cuts of 4-7%.

Companies: Merlin Entertainments

19 Sep 17

Gaming Realms Initiation of Coverage - Conviction Buy

Gaming Realms is a developer, publisher and licensor of mobile and web based real money and social games. The business was set up by the team behind Cashcade Limited, creator of bingo brand Foxy Bingo, which was sold to PartyGaming for just under £96 million in 2009. Gaming Realms has developed and acquired a host of popular games, including the flagship “Slingo” brand. The focus is upon exploiting this IP across its real money, social gaming and licensing divisions, with the strategy being to allocate capital towards the more profitable real money gaming and content licensing operations. Following a 60% rise in revenues in the 2016 financial year, followed by positive trading in the first half of 2017, the business is on the cusp of profitability. Management expect the business to be significantly EBITDA positive for FY2017 and we expect an acceleration in profits after that. A recent £1.13 million subscription has provided funds for growth, with several directors taking part. Crucially, a deferred consideration payment of $4 million previously due in August this year has been deferred to December, with the company currently organising debt facilities to pay the now $4.5 million liability. Should Gaming Realms successfully meet our forecasts for 2018 and 2019 the shares would trade on very low multiples of EBITDA and, more importantly, cashflow. We set an end 2019 target price of 17.8p for the shares and initiate coverage with a Conviction Buy stance.

Companies: Gaming Realms

02 May 17

Asset backed Action

Action Hotels (“Action”) has delivered final results in line with revised expectations following last week’s downgrade. Revenue and adj. EBITDA YOY growth of 22% and 16% was delivered with a stable adjusted NAV performance. As expected the company has incurred net losses for the year as delays to some hotel openings and significant pre-opening and financing costs impacted performance. We are encouraged by the mature business performance which has delivered stable returns despite challenging market conditions. We continue to believe this is a long term structural growth opportunity with strong asset backing at current levels.

Companies: Action Hotels

07 Mar 17

2020 Vision

We increasingly feel Merlin warrants core holding status in the consumer space. In an environment of wobbly consumer sentiment, geopolitical unrest, emerging cost inflation and volatile FX, Merlin’s diverse portfolio of brands/formats/geographies (>70% profits ex-UK) offers resilient growth, playing to enduring structural trends (‘experiential’ leisure, prominence of IP, Asia). Prelims confirmed good progress towards 2020 targets; with positive inflection in London inbound tourism. This feels well reflected in forecasts and valuation does hamper our conviction somewhat, with high capex inevitably dampening FCF (2% yield) and near-term ROCE. Our 525p TP equates to 12.7x FY17E EV/EBITDA, in line with other leisure-leaders IHG and Compass. We transition analyst coverage in this note, maintaining a BUY rating.

Companies: Merlin Entertainments

20 Sep 17

Going places

PPHE has arguably trumped its strong H117 results by highlighting its “unprecedented financial position,” which provides exciting scope for management with an enviable development record. Excess liquidity is substantial (we estimate £250+m cash after Waterloo sale backed by a valuation surplus) and its deployment is actively under review. Meanwhile impressive +23% H117 EBITDA despite headwinds and a positive outlook have led us to raise forecasts, if marginally. Heartland London recovered well, with key openings soon making their mark. A meagre rating belies PPHE’s proven profit delivery and asset backing (fair value c £18/share).

Companies: PPHE Hotel Group

28 Nov 16

One to visit

PEL has reshaped its business over the past two years, strengthening management and improving revenue visibility. Targeting revenue of £20m by 2020, revenue growth from £8.5m last year to £13.2m this year and £15.5m next suggests that at 15% growth this target may well be exceeded. Current Middle Eastern business leaves the group well-positioned to secure work for EXPO 2020 but with growing visibility the group is also confident that significant opportunities exist internationally. The scene is therefore set for a progressive revaluation of the group’s shares given the scope for PEL to expand in an addressable and fragmented international market identified by the group as worth £1bn pa. Our short-term TP is based on 7x EBITDA, equating to 5p per share in the first instance.

Companies: Paragon Entertainment

20 Apr 17

Strong final results

The group has reshaped its business over the past two years, strengthening management and operational infrastructure, increasing capacity and reviewing strategic emphasis. We anticipate a progressive revaluation given the potential growth profile in an addressable and fragmented international market. Our 2017 forecasts remain unchanged following the results which imply EBITDA growth of 26%, and we raise our target price to 6p, implying potential share price upside of 23%.

Companies: Paragon Entertainment

22 Sep 17

Downgrade to forecasts

While new regional openings are trading well across both brands, July/August trading softened across suburban London, driven in management’s view by a vacation exodus, poor weather impacting The Real Greek (TRG) and lower inbound tourism from the US and Middle East. September continued this trend and, while trade has picked up in recent days, it remains below expectations. Furthermore, capacity exiting the market is encouraging management to renegotiate rents, rent-free periods and reverse premiums, with a knock-on delay on the new opening schedule.

Companies: Fulham Shore

28 Apr 16

Small caps win dividend race

Dividend income typically comprises a substantial proportion of the total long-term return from equities. This will especially be the case at a time of low interest rates and low inflation/growth. A segmental analysis for 2013- 2016 shows that the further you go down the market-cap scale the more robust dividend growth, especially in the coming year. While there is the potential for short-term performance from “renting” some of the high yielders in the FTSE 100, overall there is better value to be had from a portfolio of good-quality smaller growth companies, some of which are also capable of delivering special dividends.

Companies: BOTB BMS FDM HAT MCGN PMP QRT SCS STAF SNX TRI

12 Oct 17

Continued momentum in Q3

GVC released a strong set of Q3 KPIs. Key highlights Group NGR up 10% (+13%cc) Sports brands NGR up 11% (+14%cc) Gaming brands NGR up 15% (+17%cc)

Companies: GVC

04 May 16

DP Poland - Q1 2016 update

06 Jun 17

DP Poland - Share placing

12 Sep 16

Safestay - Half Year Results 2016

20 Apr 17

DP Poland - Interview with latest sub-franchisee in Gdansk

18 Sep 17

DP Poland - Half Year Results 2017

22 Mar 17

Capital Network's Ed Birkin talks On the Beach

15 Jun 17

DP Poland - New commissary approaching completion

03 Nov 16

Executive Interview - bet-at-home.com (Deutsch)

08 Feb 17

DP Poland PLC - Trading update

09 Jun 16

finnCap - Initiation of coverage, Revolution Bars

Premium

10 Mar 16

PPHE Hotel Group Limited - Results for the year to 31 December 2015

09 Jun 16

finnCap - Initiation of coverage, Best of the Best

Premium

02 Jun 17

Capital Network's Ed Stacey on AFC Energy

30 Mar 16

PPHE Hotel Group Limited - Analyst interview, finnCap

Premium

02 May 16

Bitesize Briefings - GVC Holdings

Latest Content

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Accor

Reaching 600,000 rooms

Q3 revenues were €504m (lfl +6.4% yoy, reported +7.2%). 2017 guidance: the company expects EBIT in the upper side of the €460-480m range, broadly in line with consensus estimates. AccorHotels opened 73 hotels (11,000 rooms) in Q3 and has 178,000 rooms in its pipeline (up from 167,000 in H1), with emerging markets accounting for 47%.

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20 Oct 17
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On The Beach Group

Panmure Morning Note 19-10-2017

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19 Oct 17
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Rank Group

Mecca digital picking up growth

The 19% growth in digital revenue is the key highlight in Rank Group’s trading update (16 weeks to 15 October). Grosvenor digital was up 34% and, encouragingly, Mecca digital has moved to double-digit growth (up 11% vs 2% in FY17). In a continuation of previous trends, Venues l-f-l revenues declined by 1%, leading to a 2% l-f-l growth in total group revenues. Notwithstanding the decline in Venues, the core business is highly cash generative, enabling progressive dividends, as well as potential M&A. Rank Group does not face any B2 FOBT risk from the triennial review and may even benefit if it is allowed more machines. Despite this, the stock trades at c 6.8x EV/EBITDA for CY18e. Management reiterated its expectations for the full year and our estimates remain unchanged.

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19 Oct 17
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Revolution Bars Group

Revolution Bars CEO stands down after Stonegate offer falls through

Mark McQuater has resigned as CEO a day after confirmation a Stonegate takeover is off the cards.

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18 Oct 17
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Flybe Group

Flybe shares take a dive as maintenance costs impact profits

Half-year profits are expected to be 30-70% lower than H1 17.

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18 Oct 17
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Merlin Entertainments

Backing a winner

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18 Oct 17
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Merlin Entertainments

Merlin shares dive with news terror attacks will continue to impact Revenues

After a slow summer impacted by recent terror attacks and bad weather, Management expects this trend to continue.

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17 Oct 17
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Deutsche Lufthansa

Lufthansa intends to take parts of restructured Alitalia

Similar to its takeover of parts of bankrupt Air Berlin, it intends to take over some of the Italian carrier’s global net work traffic and European and domestic point-to-point business. Management has asked the commissioners to maintain confidentiality regarding the details of the offer.

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