Elegant Hotels Share Discussion Threads

[salchow] 16/6/2016 18:00

spob - my sincere apologies. I must be going cross-eyed. It was Empiric on my list where Goldman had increased their holding not EHG. I was right about Simon Thompson though!

Invisage - one of my private companies with a commercial property investment but the same principle. Falls in value soon after bought with my interest rate going up to 20% and a collapse, was it in 2008 or 2009, but overall huge increase in value and income. I mainly look for property assets and income.

[invisage] 16/6/2016 16:39

Salchow what investment have you held for the last 38 years ?

[spob] 16/6/2016 15:38

salchow

Where does it say Golman Sachs have taken a stake in this ?

[abarclay] 16/6/2016 15:05

Loads of debt

[spob] 16/6/2016 15:00

it's now around a year since the float

are lock up arrangements about to end for shareholders who may wish to sell ?


edit

14. INTERESTS IN ORDINARY SHARES AND LOCK IN ARRANGEMENTS
The Directors’ aggregate interest in Ordinary Shares following Admission will amount to 3,698,778 Ordinary
Shares (which is equivalent to approximately 4.2% of the Enlarged Ordinary Share Capital of the Company
following Admission). The Directors have entered into lock-in arrangements in respect of their shareholdings
whereby they have each undertaken to Zeus Capital and the Company that they shall not, except in certain
specified circumstances, for a period of 12 months from Admission dispose of any Ordinary Shares in which
they are interested as at Admission.
In order to maintain an orderly market in the Ordinary Shares, for a further period of 12 months each of the
Directors has undertaken to Zeus Capital and the Company not to, except in certain specified circumstances,
dispose of any Ordinary Shares in which they are interested as at Admission without the prior written consent
of Zeus Capital and such disposal may only be made through Zeus Capital or such other broker as may be
appointed by the Company subject to customary requirements.
The Selling Shareholders other than the Directors, who together hold 22,117,012 Ordinary Shares (which is
equivalent to approximately 24.9% of the Enlarged Ordinary Share Capital of the Company following
Admission), have entered into lock-in agreements in respect of their shareholdings whereby Selling
Shareholders other than the Directors who are part of the senior management team of the Company have
each undertaken to Zeus Capital and the Company that they shall not, except in certain specified
circumstances, for a period of 12 months from Admission, and Vision has undertaken that it shall not, except
in certain specified circumstances, for a period of 6 months from Admission, dispose of any Ordinary Shares
in which they are interested as at Admission. In order to maintain an orderly market in the Ordinary Shares,
each of the Selling Shareholders who are part of the senior management team of the Company have
undertaken to Zeus Capital and the Company for a further period of 12 months, and Vision has undertaken
for a further period of 6 months, not to dispose of any Ordinary Shares in which they are interested as at
Admission without the prior written consent of Zeus Capital and such disposal may only be made through
Zeus Capital or such other broker as may be appointed by the Company subject to customary requirements.
Certain Directors and Senior Managers will also be granted options over Ordinary Shares, the details of
which are set out in paragraph 7.2 of Part 6 of this document.

[spob] 16/6/2016 14:58

were goldman involved in the float ?

edit - they were not involved in the float

[salchow] 16/6/2016 13:20

Pleased to see that invisage's view is not shared by Goldman Sachs who have now taken a significant holding or by Simon Thompson in the IC but good luck with any short he may have. The company is still making profits and holds valuable assets on an idyllic holiday island. Mind you, I probably take a slightly longer term view than some and go mainly for property based assets with my largest property investment having been held for 38 years through a number of booms and busts!

Edit - Apologies I am going cross eyed. Goldman Sachs had increased their holding in another of my shares, Empiric, which was a line below my Elegant holding. The Simon Thompson hold is correct.

[invisage] 15/6/2016 20:43

EHG

A business with hardly any revenue growth but a management team keen on to quote them "our objective remains to continue extending this position while also expanding further into the Caribbean region".

The recent waves acquisition was for $18m, but as at 31st March they only had $10.7m cash on the balance sheet. That is before taking the 3.5p dividend payment into account which is about £3m or $4.2m at an exchange rate of 1.41 so effectively after the dividend has been paid the balance sheet would have $6.5m cash.

Yet, management team are committed to the acquisition strategy which means heavy dilution for existing holders as they need to raise cash to carry out further acquisitions of this type.

Then we have $55m of debt on the bs, and room cancellations due to the Zika virus.

It get's worse chaps, read this from the results :

"While bookings taken in January, a key period for future bookings, were up on the prior year, these factors have meant that Elegant Hotels has since experienced reduced bookings for the second half of FY 2016 compared with bookings at the same time last year for H2 2015. With the major booking period now over, the Board expects full year like for like sales to be slightly below FY 2015, and consequently adjusted EBITDA for the full year to 30 September 2016 is now expected to be between $20 million and $21 million."

EBITDA was $19.3m in 1H, so only $0.7m-$1.7m growth in 2H - that seems awful. Highly seasonal business where most of the profits are made 1H.

If one reads note 7 from the Interim results, in the next 3 months Sept 16 a $500k payment becomes due relating to the acquision of waves.

I would continue to avoid. Interesting to read that those who hold would'nt be buyers now, would that mean it is a sell?

[invisage] 15/6/2016 15:00

Wouldn't want to hold this small cap in a big down turn tbh. Brexit looming, markets could take a lurch down.Ehg is risky to be honest. Just look at what happened to the oil sector in the down turn last year.

[winsome147] 15/6/2016 13:52

LBO, thankd for the post. Pretty much sums up my thoughts. Poor for short termists (who are speculators) and good for long term investors.

[winsome147] 15/6/2016 11:47

One or two posters have no shares in EHG but have a real downer on them on here. Why not focus energy on companies that do interest you?

Luckily Zika news became big before the quite season started in Caribbean. Hopefully once the busy winter season starts much of the current short term problems will have been mitigated. Would I buy EHG now? No. But I wouldn't sell either. I have quite a few commercial property funds and Reits that are performed solidly through the market turmoil and they have higher debts and lower and less covered dividends than EHG. I bought these with a view to holding for years. Will I look at these in 5 yrs time and be happy with the share price and reaped dividends? I think and hope so.

The BBC Millionares Club programme focuses on Barbados next episode. Being a dominant player, one or two of EHG's hotels might feature.

[salchow] 15/6/2016 10:10

Profit warnings coming in 3's is a myth. They can also come in 1's and 2's and sometimes they even keep coming until the company is bust.

No, not many are going to buy in the current environment but that doesn't mean that holders should give them away.

[invisage] 15/6/2016 08:57

Who wants to buy shares in a company with a poor outlook ? Profit warnings come in 3s

[winsome147] 14/6/2016 16:36

Yip, if everyone will be too skint to go there soon then sell everything in your portfolio and buy gold.

[rubberbullets] 14/6/2016 16:12

Zika virus mentioned too

[rubberbullets] 14/6/2016 16:11

heading for 20p


nobody will go to barbados. everyone be skint

[lbo] 14/6/2016 16:07

The Caribbean. On the other hand, with the exception of the Dominican Republic, the Caribbean region has become one of the most indebted in the world, and its economies are more vulnerable to external shocks. The key factors contributing to debt distress in the Caribbean region are natural disasters, economic volatility, banking and currency crises, and socioeconomic challenges such as high crime, poverty, and unemployment.[13] The four Caribbean states with the highest debt-to-GDP ratios are Jamaica at 133 percent, Antigua and Barbuda at 107 percent, and Barbados at 103 percent. Following Puerto Rico's default, Jamaica could be the next Caribbean country to face a sovereign default given its debt levels, persistent low growth (at less than 1 percent a year in the last decade), weak government, and intermediate institutional strength.

[winsome147] 14/6/2016 15:16

Invisage, short term buy - NO. I don't agree with your concerns re debt. The way I read the results are:

LTV = 25% based on the current 'understated book value' or
LTV - 17% based on last year's CBRE value

Both are way below levels most REITS currently run at. The current book value and Ebitda imply a gross yield of 13.2% in a good year. If the CBRE value is used then the gross yield is 8.7%. After interest payments and tax roughly 9 and 5.8% respectively.

Based on that the CBRE valuation is top end but not unrealistic if they were to sell out to a bigger competitor.

The 7p div should be pretty safe unless something more catastrophic hits Barbados. So one for long term value and income. With current market conditions I think they drift along between 80p and 95p next few months. Any lowe and I will top up.

[lbo] 14/6/2016 15:01

What are the chances of a dividend cut next? Management may be committed to paying it but doubt the debt holders are so committed to equity holders

[invisage] 14/6/2016 13:41

Wouldn't want to hold a minnow like this with current volatility tbh. Can go a lot lower, hardly any cash on bs If they wanted to grow would get massive dilution at current prices.Not worth the current risk at these prices Imo.

[salchow] 14/6/2016 11:34

aim_master - I presume I am right in saying you have to subscribe to read this?

The company have indicated that the targeted dividend will be paid and at 7.1% I would not be worried about short term issues. For those worrying about health scares there have been many in my lifetime and all of them eventually get forgotten. As far as debt is concerned if you are going to build up a business primarily holding property assets then you can expect to see debt.

[winsome147] 14/6/2016 09:03

If it does go any lower I will top up. The expensive dollar, Zika and maniac gunmen will hit Florida and Disneyworld short term, but 12 months time there will be something different to spook holidaymakers around the globe. Malaria and terrorism are the biggest risks to travellers' health. Barbados doesn't have them.

PPHE is a similar boutique hotel group that I bought in at 240p a few years ago based on niche market and well below NAV. They have had some big swings but now at 808p with nice (but smaller) divs along the way.