Elegant Hotels Share Discussion Threads

[invisage] 14/6/2016 08:25

60m debt and only 10m cash on balance sheet before dividend is paid. Think we will get another lurch down after dividend tbh in next few weeks.

[winsome147] 14/6/2016 08:09

The LTV is not that high actually. I wouldn't buy at the moment but I wouldn't sell my current holding either at this morning's level. This was a long term hold for me while I rake in the divs which look safe regardless of the very short term outlook. So the short term psychological pain from the drop in share price this morning should be ignored. Barbados has been a consistent performer through years of world problems and was largely unaffected by the credit crunch.

I like to stick with companies with sound management.

[invisage] 14/6/2016 07:31

Bad outlook. Wouldn't touch with barge pole. Aggressive competition for minimal business, Zika virus will keep tourists away. Too much debt too.Don't believe the NAV figures either, just don't trust foreign companies tbh to put out accurate valuations!They appear to have gained on acquisition recently - feels more like an inflating of assets rather then a gain! The asset is worth what a buyer is prepared to pay for it.

[funkmasterp12] 14/6/2016 07:24

Eef, nasty. I had my eye on this company but that warning/outlook isn't good.

[le4r] 13/6/2016 08:12

Results tomorrow and still downward pressure on the offer...

[saucepan] 31/3/2016 11:24

Thanks, carcosa. I am sure worth heeding.

However, this from Shares Mag in January (before the latest earnings enhancing acquisition):

‘Our margins are high because of how we price our rooms. Barbados is one of the most expensive destinations in the Caribbean. The high prices let us convert well and be very cash generative. We are able to pay dividends and service our loans. We negotiated a loan of $50 million but we’ve only taken $45 million and we have other loans that we haven’t touched.

‘We are poised and ready to make acquisitions and anything we buy will have to be cash generative,’ says Chatrani.

[carcosa] 31/3/2016 09:48

I would suggest you look at the significant amount of debt and contingent liabilities they have taken on board together with large capital expenditure required in the near future. the look at the LTIP. Balance sheet will be looking very weak and the potential of shareholder dilution looms large. IMO.

[saucepan] 31/3/2016 09:40

Hi folks (should anyone still be around?)

EHG came on my radar somewhat by chance (ShareScope data mining). The value/growth story looks good to me. I am thinking EHT is currently oversold but has found support just above the psychologically important round number 100p level.

The Zika virus has clearly weighed on sentiment somewhat. From the research I have undertaken, however, peak season winter tourist numbers in Barbados have actually been really strong and Barbados has been very serious and diligent in its anti-vector programme.

[lbo] 02/2/2016 06:09

Four major U.S. airlines have announced that they will allow some customers to change or cancel flights to countries where the Zika virus is active, a move that reflects the growing worries about the impact of the virus

[jeff h] 01/2/2016 20:53

Featured by W.H.Ireland in this months WHI Spy:-

UNIQUE ASSETS – ASSET BACKED AND IMPRESSIVE YIELD

Elegant Hotels joined AIM last year after raising £63m at 100p a share and attracting a strong blue chip investor base with the likes of Fidelity, Schroders, Miton and Artemis. The group owns and operates five luxury hotels (Colony Club, Crystal Cove, Tamarind, The House and Turtle Beach) and Daphne’s, a beachfront restaurant – all are located in Barbados. All the properties are
freehold (c20 acres in total) and comprise 483 rooms with four of the five sites
situated on St James, the prestigious west coast of the island.

Previously majority owned by private equity house Vision Capital (still a 24%
shareholder) the group has invested $24m in refurbishment capex over the last five years (Source: Company) – all under the guidance of the current management team. Elegant also operates its own sales and marketing function in Florida which allows it to compete effectively with smaller rivals by focusing more heavily on yield/revenue management – as evidenced by the 5.7% increase in average daily rates in 2015 to $373. Last year all but one of its hotels (Turtle Beach suffered from refurbishment at a neighbouring hotel)enjoyed revenue growth.

Barbados has enjoyed a period of political stability and is well established as a premium location with the UK, US and Canadian holiday markets accounting for 73% of visitors (Barbados Tourism Authority). It is also enjoying a strong period of growth in tourists to the island which has led to increasing numbers of flights being provided by the airlines.

What we like

Due to its size, Elegant benefits from economies of scale by better buying across the group, so as long as visitor numbers continue to be robust it should be able to drive organic growth. Management are also keen to expand their proposition by seeking out acquisitions of underperforming hotels in Barbados as well as in neighbouring Caribbean islands such as Antigua and St Lucia.

Chairman Simon Sherwood says, “We are a strongly cash generative business with a good market position”. Elegant offers investors a unique opportunity with asset backing and an attractive 6.2% yield which is comfortably covered. Trading on less than 11x 2016 earnings the shares are attractive.

Elegant Hotels (EHG)

FTSE AIM – Share price: 113p | Market Cap: £101m | www.eleganthotels.com

Estimates to Dec 2015(A) 2016(E) 2017(E)

Revenue ($m) 60.1 62.9 64.7
PBT* ($m) 16.1 18.4 19.4
EPS* (p) 9.6 10.7 11.5
P/E (x) 11.8 10.6 9.8
DPS (p) 3.5 7.0 7.0
Yield (%) 6.2 6.2 6.2
*Adjusted/pre-exceptional IPO charge in 2015
Source: Company, Capital IQ estimates
Analyst: Miles Nolan

[winsome147] 30/1/2016 10:55

I would think that people who can afford to holiday in Barbados are a bit more educated than average and less prone to worry unless they are pregnant. What country does not have risks to travellers these days? Zika will spread across the US this summer but it has been around for many years so those who worry too much will have to stay away from Florida, California, Las Vegas, etc. Maybe Mediteranean too. Will worldwide tourism suffer one jot? No.

I briefly thought about selling my EHG shares as I bought in at the 100p level but then I realised Zika wouldn't concern me at all if I'd just booked a holiday in Barbados. Asia has Yellow fever, malaria and everything else going but doesnt worry tourists.

[wjccghcc] 29/1/2016 00:19

Good article. Thanks tintin.

Still inclined to sit this one out until the situation becomes clearer.

[tintin82] 28/1/2016 16:03

Good article

hxxp://www.ibtimes.com/will-zika-virus-hurt-tourism-caribbean-not-yet-increased-threat-could-dissuade-2282330

“This is probably the busiest time in the past couple of years right now,” Adua Kinch, one of the Dover Beach Hotel’s owners, said Tuesday. “There’s always mosquitos around, but it’s never anything out of the ordinary. It’s not a big deal. It’s business as usual, really. We just take the necessary precautions.”

As you say WJCCGHCC, if panic sets it may affect the longer term. For this season however it looks like a belter.

[wjccghcc] 27/1/2016 12:57

True, but that's unlikely to last if Zika panic sets in.

[tintin82] 27/1/2016 12:54

Each to their own. The situation in the Middle East is pushing rates in the Caribbean through the roof though.

[wjccghcc] 27/1/2016 12:20

I've taken profits on mine. Concerned the Zika virus (which has been found in Barbados) may impact bookings in the short-term. Probably not many of their clients are pregnant women but the question is whether it spreads to a larger panic.

[jeff h] 07/1/2016 12:13

A write up in Shares mag today as well.

[tintin82] 06/1/2016 14:04

Another very encouraging write up by ST today.

[eezymunny] 03/1/2016 12:31

Midas tip for 2016. FWIW.