Elegant Hotels Share Discussion Threads

[lbo] 16/11/2017 08:03

Yes they should have made an announcement at the time back in December 2016 when Tripadvisor customers reported it had been closed due to damage to the roof from flooding. It was significant enough to be mentioned In the final results on 17th January 2017 but they were still not upfront on everything."Daphne's restaurant, which sits between Tamarind and The House, was also negatively impacted by the declines in occupancy at both properties"Then in the interims in June 2017 it was again significant enough to mention again and be upfront on the losses."During the period, Daphne's restaurant was closed for unforeseen repairs which could not be delayed until the off-peak time of the year. This contributed to a loss of EBITDA of circa $400k versus the prior year for this site"

[opodio] 16/11/2017 06:38

65p target

[stemis] 15/11/2017 23:49

You clearly do have a grudge which is why you spend so much time rubbishing Elegant, and looking for articles to justify it, over such a long period of time (which is odd considering you have no financial interest either way). You are of course entitled to do what you want, it doesn't make any difference to me, but I was responding to trytotakeiteasy really. I'm not saying some of your posts don't have merit but it's worth considering your motivation considering most of the time you are just about the only person posting here...

[trytotakeiteasy] 15/11/2017 21:21

LBO - I agree on some points you make and personally I value a critical eye on a business. So keep the points coming.

CBRE valuation - I agree here putting this out is bizzare given how out of date it is.
Daphnes closing - This was just for a refurbishment. It is only a restaurant so I am not sure it is a big deal. Would a company need to issue an RNS to say we are closing one restaurant for a refurbishment?
Visitor numbers - I think Elegant were referring to the six months to March 2017. I think UK visitor numbers to Barbados did fall in this critical winter trading period. Numbers from elsewhere went up. The stats you are referring to are for the whole of 2016. However, the post Brexit period in the second half of 2016 was hit by the fall in sterling. So it is entirely possible that UK visitor numbers fell in the six months to March 2017 on a year ago. If you go to the Barbados Central Bank website there is more information.
Trading statements - I would of thought when they said trading was ahead of last year they meant in terms of RevPar (revenue per available room).
New competition - That is a good point and it does look like Sandals it trading better than them.

I agree that this has been a rocky IPO and the future is uncertain. However, it also has a modest valuation. All we need is for the dividend to be held to get a pretty good return.

[lbo] 15/11/2017 20:30

I have no grudge but odd you would question me rather then the company who have been putting out profit warnings and repeating old and questionable CBRE asset valuations. They also never made the market aware of Daphnes closing and the financial impact until the interim results but you question me?

LBO 23 Dec 16 19:03 - 358 of 609


Very bad they have not put out an RNS about Daphne's having to close down!

[stemis] 15/11/2017 19:56

I think it's generally considered that LBO has some sort of grudge against Elegant although we've never found out why...

[trytotakeiteasy] 15/11/2017 17:19

LBO - Ok thanks let me look into that. You appear to be more knowledgable. Out of interest what is your thesis on Elegant Hotels? I take it you are bearish? Presumably you think their hotel estate is poor versus the competition???? Valuation seems modest to me but it depends on trading at least remaining stable.

[lbo] 15/11/2017 16:53

And they did not say trading was ahead. They said "Trading since the interim results in June has remained in line with market expectations"

Market expectations that have already had to be reduced on two occasions.

Also what they did say about bookings had the warning they were only 12 days in,

"Whilst the Group is only 12 days into its new financial year, it is pleased to report that bookings are currently tracking ahead of the same period last year"

And you would of course expect Elegant bookings to be ahead as they have bought more rooms and have more rooms to sell.

Also Sandals who is obviously out performing them over the last year is expanding and opening another new Hotel this December.

[lbo] 15/11/2017 16:43

That's not correct. The figures show U.K. Visitors increased to the island while Elegant hotels Occupancy fell.



The majority of holidaymakers originated from the United Kingdom and remains the island’s main source market. A total of 218,638 stay-over visitors from the UK were recorded last year, which was 2.1 per cent increase compared to 2015.



The Caribbean island has reported 10% growth from the UK in the first quarter of 2016, off the back of a record 2015, when the UK market finished almost 14% up.

"We achieved our highest ever number of air visitors last year and it’s always difficult after a double-digit increase to match that again, but based on what we see we think we can expect positive growth this year," said William Griffith, chief executive of Barbados Tourism Marketing Inc (BTMI).

The island has 10% more airlift from the UK for 2016, including British Airways to increase from 10 to 12 flights per week from November.

[trytotakeiteasy] 15/11/2017 15:11

LBO - this is due to Elegant hotel's focus on British visitors. Also probably refurbishments had an impact. The reason Elegant Hotel's occupancy fell last winter (six months to March 2017) was a fall in British visitors. Elegant have already said that trading for this winter period is ahead of last year. There is also a new flight by Virgin Atlantic from Heathrow starting in December.

Not sure why the doom and gloom here. Unless they cut the dividend there is an attractive 8.6% yield.

Virgin ad promoting Barbados:

[lbo] 15/11/2017 13:21

But they are not staying in the Elegant hotels properties. Sandals barbados have occupancy rates averaging 85% while Elegant occupancy fell to 66% from 69%

[mortimer7] 15/11/2017 12:22

hxxps://www.caribjournal.com/2017/10/09/barbados-tourism-continues-surge/#
"The growth has been buoyed by innovative new marketing campaigns, increased airlift and expansion and renovation projects from hotel companies like Elegant Hotels".

[lbo] 18/10/2017 14:56

Sounds like similar industrial dispute could be on the way for Elegant Hotels now that they have dropped out of the BHTA agreement

[che7win] 18/10/2017 13:50

LBO dosent appear on my mobile app, anyway he must be saying something bullish as this keeps rising.Cheers

[bookwormrobert] 18/10/2017 10:42

Hi LBO! Thanks again for the "bear" case for EHG - it's good to keep things real. But I think you meaan NAV of 1.2848 US dollars (not cents) per share, and thus 97p per share. Yes?

[spob] 18/10/2017 10:09

Re: Paul Scott comments

I think if you have a rule in regard to overseas companies on AIM, you should stick to it.

Personally i have lots of cash waiting to be invested and am quite happy to wait until panic hits the markets again.

[lbo] 18/10/2017 09:12

If anything the recent acquisition valuations lower the overall NAV when applied to the other Elegant properties which have not all been refurbished. They confirm asset prices are still falling in Barbados. The $10.5m Treasure Beach deal equates to $300,000 per refurbished room when divided by 35 while Waves was bought for $18m plus the $4m Cap Ex so which when divided by the 70 rooms put a value of $315,000 per room.

Using these post refurbishment valuations ($300,000 X 588 rooms), the Group's properties INCLUDING Treasure Beach, would be valued at ONLY $176.4million not $257m excluding treasure beach as per the half year report which again references an old CBRE valuation as at 15 April 2015 (over 2 years old and based on higher asset values at the time and higher occupancy, RevPar and cashflows back then). There has been multiple profit warnings and reduced earnings per share since 2015) Also not all the groups properties have been refurbished so this would still be an optimistic valuation applying it across all the properties. But still based on net debt of $62 million at 31 March 2017 (debt should be $8m higher after Treasure beach acquisition closed May 2017), this would equate to an implied net asset value (NAV) of less then $114.4 million not $195m as reported (ie less then $1.2848c per share or less then £0.97p per share, based on today's exchange rate)

[salchow] 13/10/2017 09:32

Masurenguy - Paul Scott later had his attention drawn to the fact that his asset values were wrong and did not take into account increases in value of the latest acquisition and he agreed that the figures were even more favourable than he had stated.

From a chart perspective it is good that there has been such a positive bounce off the clear support at 80p.

[lbo] 12/10/2017 16:52

Liberum has made no changes to its forecasts which had already been lowered previously. It's no great surprise that as they acquired a lot more rooms then you would hope they can do a bit better then just sell a few more rooms. Crucially overall RevPar and occupancy has been falling but the acquisitions have managed to paper over the cracks that are developing.

[masurenguy] 12/10/2017 13:18

Paul Scott likes Elegant Hotels.

Valuation: This share looks strikingly cheap, which makes me worry that there might be something wrong? Zeus are forecasting 8.1p EPS for the year just finished, 09/2017. That's a PER of 10.5. For y/e 09/2018, they are forecasting 10.4p EPS, for a PER of 8.2.

Dividends are forecast at 7.0p for each year, giving a divi yield of 8.3% - usually that's too high to be sustainable, so a question mark hovers over such a high payout, which is only just covered by earnings. Personally I think the company is over-paying, and should probably halve the divis, and redirect the saved money into refurbs to keep the properties in tip-top condition. Reviews on TripAdvisor seem to indicate that inadequate maintenance is a problem.

Asset-backing - what I like about this company is that it owns the freeholds for these prestigious properties. So the balance sheet looks solid, with $118.3m NTAV - that's $1.33 per share, or a whisker over 100p per share. So at 84.8p, the shares are trading 15% below NTAV. Two brokers today state that the discount to NAV is much larger. I've checked their figures, and the discrepancies seem to be that they're using an outdated exchange rate of £1 = $1.25 (whereas I have used the current exchange rate of £1 = £1.32). Also the brokers seem to have uplifted the value of the freeholds by $20m over book value, in their calculations.

Given how cash generative the hotels are, I can't see any reason to question book value, which seems reasonable. There is $173m in property assets, and $61.5m in net debt, shown in the most recent accounts. That looks a perfectly reasonable position, so there are no worries about excessive debt.

My opinion - this seems a very reasonably-priced share. I like the low PER, the monster divi yield, and the asset-backing. That Luke Johnson has given it his seal of approval, by buying about £10m-worth of shares, and joining the board, is nice confirmation. I wouldn't normally buy shares in any overseas companies on AIM, but this (and Somero Enterprises Inc (LON:SOM) ) are rare exceptions. I see upside to maybe 100-120p per share, with patience. Along the way we get huge divis to keep us interested. Plus there is expansion (contracts to manage other hotels) in the pipeline. Overall then, I like it.

[shauney2] 12/10/2017 12:53

It does look good value.

As an aside.Do they give shareholders a discount?