Elegant Hotels Share Discussion Threads

[lbo] 17/1/2017 13:16

Also ask yourself why Waves was so cheap? What does that tell you about the demand in the current Bajan market for hotels as investments? Also we did not see any hotel operators seeing the supposed value in Elegant Hotels and trying to buy all the shares off Vision Capital or even takeover the company.

[lbo] 17/1/2017 13:09

How would IMF intervention and a rapid currency devaluation be good for Elegant Hotels NAV who would be holding Bajan assets during the devaluation?https://www.barbadostoday.bb/2016/11/14/time-to-sell/A regional financial solutions firm is predicting that Barbados may soon be forced to turn to the International Monetary Fund (IMF) for a bailout, and has urged investors to dispose of their investments in Barbados "now rather than later".Rapid devaluation has its negative implications and this is definitely a threat to economic stability," warned Burrell in a seven-page, November 11, 2016 investment and sovereign research newsletter titled, Barbados – Time to Sell.

[salchow] 17/1/2017 12:57

Results are pretty much in line with forecast which I anticipated. I would hope the dividend can be held until business picks up and at this depressed level there is plenty of opportunity for good growth and expansion over future years. It is one to put away and forget about for a while although I will be interested to see what Luke Johnson may be able to bring to the table.

[bookwormrobert] 17/1/2017 12:10

LBO is trolling again, folks. Please do your own research. Waves is not typical of EHG's stock, and was bought cheap.

A currency devaluation in Barbados, whilst bad for its people, would be good for Elegant Hotels. They earn in pounds and US dollars, but a large part of their costs are in Barbadian dollars.

[che7win] 17/1/2017 11:53

Elegant Hotels Group Plc (LON:EHG) today announced a full year results statement, Zeus Capital said: 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.

Final results: Final results are broadly in line with our expectations revised in June. Revenue was down 5.2% YOY and was 1.5% below our forecast. This was a function mainly of lower occupancy albeit FX with weaker sterling also impacted demand during the period. Adjusted EBITDA was -11.4% YOY and 2.1% lower than our downgraded forecast expectation from June 2016. EBITDA margins slipped from 36.9% to 34.4% as a result with gross margins falling from 62.5% to 61.7% (vs our forecast of 64.2%) similarly driven by weak occupancy.

Key performance drivers: Occupancy was the key driver behind the EBITDA decline and fell from 68.4% to 62.9% during the year (ZC 63.0%). Elegant did see modest rate growth in a difficult market with ADR +1.3% to $378 (ZC $387), driving an implied REVPAR -6.7% YOY to $238 (ZC $244). Within the mix, Colony Club recorded another record year ahead of our expectations with REVPAR +3% YOY (ZC -3%). Turtle Beach did begin to recover from the disruption of the refurbishment works at a neighbouring hotel, but still experienced a decline in REVPAR of -8% (ZC -10%). The House, Tamarind and Crystal Cove all saw REVPAR declines of 8%, 11% and 6% respectively (ZC -9%, -13% and -5%) due to the fall in occupancy.

Forecasts: We are maintaining our headline assumptions following these results. We do make modest changes to the mix of hotels, with Colony Club outperforming our expectations, which is offset by some further disruption anticipated in other hotels following investment. We continue to assume a flat dividend going forward, albeit dividend cover is expected to trough at 1.2x based on our 2017 forecasts before rebuilding to 1.5x in 2019E. We have introduced our 2019 forecasts for the first time, and assume modest REVPAR progress to $247, which remains below the peak 2015 performance of $255.

Investment view: While the shares have rebounded 29% from the trough point of 62p in August, we believe the valuation remains undemanding trading on a P/E of sub 10x trough 2017 EPS falling to 7.8x in 2019E. The current dividend yield of just short of 9% is also clearly attractive along with the asset backing and c60% discount to NAV in excess of 180p. We therefore continue to believe there is good long term value in the shares at current levels.

Highlights
· Revenue down 5.2% to $57.0 million (2015: $60.1 million)
· RevPAR down 6.7% to $238 (2015: $255)
· ADR (average daily rates) up 1.3% to $378 (2015: $373)
· Adjusted EBITDA: down 11.6% to $19.6 million (2015: $22.2 million)
· Adjusted operating profit: down 14.5% to $16.3 million (2015: $19.1 million)
· Adjusted EPS of 13.1 cents per share (2015: 14.7 cents per share)
· Successful acquisition, refurbishment and reopening of Waves Hotel & Spa in Barbados
· Signed management contract in November for Hodges Bay Resort & Spa in Antigua, the Group’s first property outside Barbados
· Year-end net debt of $61.8 million (2015: $40.8 million)
· Proposed final dividend of 3.5 pence per share, resulting in a full year dividend of 7.0 pence per share

Commenting on the results, Sunil Chatrani, CEO of Elegant Hotels Group Plc, said: “Against a backdrop of challenging market conditions, the Group has delivered a solid performance and made good progress in key areas during the year. We have significantly expanded our business, both through the acquisition of Waves Hotel & Spa in Barbados and the management contract that we recently signed on a property in Antigua. Despite the current challenges that the Group and the wider Barbados luxury hotel market are facing, we continue to be confident in our long term growth prospects and remain committed to our expansion strategy in both Barbados and across other parts of the Caribbean.”

[lbo] 17/1/2017 11:39

Waves was bought for $18m plus the $4m Cap Ex so valued at $22m. Which when divided by the 70 rooms puts a value of $315,000 per room.Take that most recent Waves valuation and apply it to the rest of the Elegant legacy hotel portfolio which totals 483 rooms and you get a value of $152m which is a long way short of the supposed $235.5 million by CBRE as at 15 April 2015.And adding the legacy hotel portfolio of $152m plus Waves gives total Asset value of only $174m similar to the carrying value. Less the net debt of $61.8m which again has increased since March and this would equate to an implied net asset value (NAV) of under $112.2m. Which gives an NAV of $1.26 per share which at current exchange rates is £1.03 per share.Then apply a a normal market discount, another discount for the falling EBITDA and need for high capital expenditure in some of its properties eg House, Tamarind etc and a further discount for the assets being in Barbados and the country risks of having high debt to GDP ratios and the real risk of IMF intervention and currency devaluation.

[profitaker] 17/1/2017 11:37

That makes sense, thanks salchow.

[salchow] 17/1/2017 11:23

Profitaker - a balance sheet is not supposed to show the value of the company. Property used in the business is generally included at cost less depreciation. Investment property is treated differently but this is not investment property.

[profitaker] 17/1/2017 11:04

"...the asset values are still in the Directors' opinion significantly in excess of their carrying values in the accounts"

This makes no sense at all. If the Directors "opinion" could be corroborated by independent valuations why wouldn't they do so and state those values in the accounts ? They are effectively saying that the accounts published today don't state the true financial position of the company.

I hold the stock.

[nw99] 17/1/2017 10:58

Good spot no wonder Luke is buying stakes

[mortimer7] 17/1/2017 10:49

Love this little gem in the narrative today:-

"The strength of the Group's balance sheet lies in its assets as well as the renewed financing arrangements. The Group's property, excluding Waves, was valued at $235.5 million by CBRE as at 15 April 2015, which is greater than its value in these financial statements".

The property value on todays balance sheet is $173 million. And that includes Waves.

So there's a massive potential uplift in the company NAV. Even allowing for the fact that the basis of the CBRE valuation is not known, this is a fantastic buffer underpinning the asset value.

[nw99] 17/1/2017 10:40

ElegantHotels Meeting. (New) Waves Hotel (post refurb) looks fantastic. $EHG now in key Jan / Feb booking period. Shares yield 8.8%

[mortimer7] 17/1/2017 10:31

I'm hoping for a bounce in the share price tomorrow when todays divi declaration of 3.5p (yield 4.4%) is shown on the upcomingdividends website. Should be an attractive one for divi hunters.

[che7win] 17/1/2017 10:22

I'm pleased with the results and the intention to keep that dividend. Extra flights coming in and long term prospects are good.

[nw99] 17/1/2017 09:36

No surprise there

[bookwormrobert] 17/1/2017 09:35

Very positive analysis from Zeus, saying that the shares are very good long term value.

[nw99] 17/1/2017 07:53

Full year results to Sept '16. Proposed final dividend of 3.5p, resulting in a full year dividend of 7.0p. Yields 8.8%

[bookwormrobert] 17/1/2017 07:51

Just read the annual report - OK to fair.
Dividend maintained at 7.0p for the year, so 3.5p dividend on 27th January.
Not a word about Zika in report, which is a little disingenuous. Instead, they blame the year's difficulties mainly on the fall in the pound. Anyway, hopefully Zika is behind us now, and I imagine that the pound is near it's lowest point, too.
I imagine the share price will rise slightly as a result of the report, but let's see!

[nw99] 16/1/2017 17:11

More stake building

[che7win] 16/1/2017 16:27

250,000 buy

[sharw] 16/1/2017 13:41

Paul Scott's main review was October 14th.:

[nw99] 15/1/2017 22:19

On Paul Scotts radar now Also, results from Elegant Hotels (EHG) this Tues. On my watch list, but am waiting for 2017 summer outlook before buying.

[bookwormrobert] 13/1/2017 16:30

I was hoping the price would dip below 75p at some point so I could bottom fish some more shares, but no luck!

[che7win] 13/1/2017 15:53

One trading day to go:

The Board reiterates that it expects the Group's full year results for FY16 to be in line with market expectations. As previously announced, the full year results will be released on Tuesday 17 January 2017.