Hostelworld Share Discussion Threads

[john09] 15/10/2020 10:53

It’ll be friendless today and tomorrow this . 30p might be an entry

[kemche] 15/10/2020 10:46

"We believe the shares offer 200% upside on a 2 year view."

[john09] 15/10/2020 07:05

This should get cheaper today. Amazed the share price is where it is

[masurenguy] 28/9/2020 16:10

Thanks 1blueletter - some interesting points from the link in #768 above.

Post Lockdown the Millennials and the Zoomers are going to get out and explore – Hostelworld (HSW.L) has 200% upside on a 2 year view.

Post lockdown there will be major demand for the young budget conscious traveller to explore, socialize and interact. By the new year, global youth will have been starved of ‘experiences’ for close to 12 months with significant disruption to their lives and often trapped at home. Pent up demand for a budget hostel and backpacking is significant once lockdowns dissipate. This month, September 2020, Hostelworld released an interesting survey based on a survey of over 3,000 backpackers. The main points a) 52% are ready to travel within 6 months b) 55% expect international travel to be available in 2021 c) 56% of Americans were planning to travel domestically. Given restrictions domestic and short haul has represented 2/3rd of its booking for Americans, British, German and French nationals. However, they need flexibility given the uncertainty and Hostelworld has accommodated with non-refundable but flexible rate.

The company benefited from a capital raise in H1 of 15mn euro and has very little long term debt at 3.5mn euro (but, like a lot of businesses payables have grown to 17mn euro with employer contributions being a big driver). However, these obligations are more than covered versus 33mn euro cash on balance sheet at the end of June. This means the cash on balance sheet remains close to 50% of its market cap. The cash burn in H1 was controlled (thanks to a reversal in working capital and pushing out payables). This will mean the equity value is supported with a high net cash position.

What is Hostelworld worth?

Lets look at revenue multiples as earnings have been decimated. Historically the company has traded around 2 to 3x Revenue (EV/trailing revenue).
When the revenue growth rate was higher in 2015 to 2018 the market afforded it a multiple of 4x EV/Revenue.

Analysts expect that by 2022 it will have recovered its 2019 revenue of 80mn euro. We believe the pent up demand to go backpacking will be significant.
Let us be conservative and put Hostelworld at 2x trailing revenue for 2022, this would imply an enterprise value 160mn (2x revenue). If we add back net cash of 30mn this points to an implied share price of 1.7 euro versus 0.59 euro currently (note the liquidity is on the UK line, 55 pence).

Conclusion

Hostelworld is an industry leader, with cash on the balance sheet to deal with an extended lock down. We believe the shares offer 200% upside on a 2 year view. The youth will go travelling again and a travel lockdown will not continue indefinitely. Now is the time to start accumulating.

[1blueletter] 28/9/2020 14:20

Good research piece I read on Hostelworld this morning on The Collective Finance -

[jp2011] 28/8/2020 08:42

The bonus issue is really a script dividend which is earnings dilutive. Seems a pointless exercise but it allows the MMs to mark the price up and offload stock. This isn't going to move until travel starts up again.

[masurenguy] 12/8/2020 07:29

Interim Results 2020

H1 2020 in line with expectations; modest increase in bookings in recent weeks in line with the easing of travel restrictions.

Accelerated delivery of Roadmap for Growth initiatives

12 August 2020: Hostelworld, a leading global OTA focused on the hostel market, is pleased to announce its interim results for the period ended 30 June 2020

Financial highlights:

-- Net revenue of EUR12.0m in H1 2020, a decline of 69% (H1 2019: EUR38.8m), driven by COVID-19 led travel restrictions from late Q1

-- Total Group net bookings decline of 67% (H1 2019: -10%)

-- Net booking volume decline from 3.5m to 1.1m, with cancellations EUR5.4m (H1 2019: EUR4.8m)

-- Net Average Booking Value EUR9.45 (H1 2019: EUR12.40), reflecting increased cancellations which had longer lead times and higher ABVs

-- Marketing costs in Q2 reduced to match revenue volumes. Total H1 2020 marketing costs of EUR7.5m were 76% of net revenue (excluding deferred revenue), an EUR8.8m reduction compared to H1 2019 (H1 2019: EUR16.2m, 37%)

-- Q2 operating costs, excluding marketing overheads, reduced by 20% to EUR5.5m, down from EUR6.9m in Q1 2020 (14% reduction compared to EUR6.6m in Q2 2019)

-- Adjusted EBITDA loss of EUR8.3m (H1 2019: EUR8.9m profit), in line with guidance

-- Basic loss per share of 18.90 EUR cent (H1 2019 basic earnings per share: 6.82 EUR cent)

Balance sheet and cash flow:

-- Raised gross proceeds of EUR15.2 million ([1]) through a non-pre-emptive placing of and direct subscription for new ordinary shares in June 2020

-- Committed EUR7m three-year revolving credit facility secured, undrawn as at 30 June 2020([2])

-- Closing cash position EUR32.9m (H1 2019 EUR25.4m) includes cash on hand of EUR29.4m and a EUR3.5m short-term financing facility

-- Customer deposits related to bookings made under the free cancellation policy amounted to EUR3.3m (H1 2019: EUR7.3m), of which EUR2.7m relate to bookings already cancelled

-- Adjusted free cash absorption (33%), (H1 2019 adjusted free cash flow 108%)

-- Cash dividends for 2020 remain suspended due to COVID-19 uncertainty. In lieu of a cash dividend the Board is proposing to issue new ordinary shares, by way of bonus issue, to shareholders based on a value of 1.0 EUR cent per share and subject to shareholder approval

-- It is the intention that the number of shares that a shareholder will need to hold to qualify for each new bonus issue share will be calculated by dividing the prevailing average share price (in EUR cent) prior to the publication of the shareholder circular by 1.0 EUR cent. The record date for the bonus issue will be set out in the shareholder circular

Gary Morrison, Chief Executive Officer, commented:"The COVID-19 pandemic has resulted in significant trading disruption for our business and the global travel industry. From the outset our focus has been the wellbeing of our employees, to support our hostel partners and customers and to strengthen the Group's balance sheet. We entered the year in a strong position, having delivered a return to net bookings growth during Q4 2019, however, COVID-19 drove a sharp reduction in our trading performance. We reacted swiftly and purposefully to protect the business and to enable us to navigate through this crisis. Our initial efforts were focussed on cash preservation and in June we took action to strengthen our balance sheet, via a debt facility and an equity raise. Together these actions provide the Group with the financial strength to operate through this crisis and beyond.

Over the last few months we have taken the opportunity to accelerate our Roadmap for Growth program to strengthen our core platform, completing items planned for H2 2020 and 2021 ahead of schedule. Consistent with our growth strategy, which builds on our Roadmap for Growth, we also intend to broaden the catalogue of experiences and social features we offer our customers, beyond hostel accommodation. Given the current trading backdrop, we remain focused on organic initiatives in the near term, until a resumption of normal trading.

While the short-term outlook for the travel industry remains extremely challenging, I remain confident that Hostelworld will emerge from the COVID-19 crisis stronger than before. I would like to take this opportunity to thank all of our employees for their continued hard work and commitment, and our customers and shareholders for the support they have shown through these challenging times."

Trading update and outlook:

In recent weeks we have seen an increase in demand as travel restrictions have eased, and we are tracking slightly ahead of our Base Case scenario. This recovery started with very modest growth in domestic bookings in June, and more recently has progressed to very modest growth in domestic and short-haul bookings into Europe. Overall, we expect the pace of recovery to mirror changes in travel guidance in individual markets over the coming months, both positive and negative. Elsewhere, source markets in the Americas, Asia and Oceania continue to remain very depressed.

As the recovery has progressed, we have seen a steady reduction in cancellation rates, and an increase in conversion rates as consumers certainty with respect to their travel plans has improved, compared to significantly stressed levels during Q2. This has led to higher marketing costs as a percentage of net revenue in the near term, which we expect to gradually normalise as normal travel patterns resume.

On the supply side, despite significantly depressed demand during Q2, we have seen only a modest reduction in the number of hostels on our platform compared to year end 2019 levels. We are also working with the hostelling industry to ensure we display details of the additional COVID-19 policies at each hostel in a consistent manner. Overall, we are encouraged that our travellers are continuing to book Dorms in the majority of cases - with only a slight shift to date in accommodation mix towards Private rooms versus Dorm accommodation across markets.

Overall while bookings continue to trend well below normalised patterns, and assuming a gradual improvement in the macro travel environment, we expect the recovery to improve further in Q3 and Q4 2020, albeit net bookings will remain at significantly reduced levels when compared to 2019. Whilst this recovery is likely to take some time and the consumer environment will continue to be uncertain and challenging, the Board remains confident in the resilience and flexibility of our business model, and that we are well positioned to execute on our strategy and build market share as demand recovers. In parallel, the Board will continue to evaluate internal and external opportunities that will deliver value for shareholders, in particular the significant potential to enhance future growth primarily through building out a broader catalogue of experiential travel products beyond hostel accommodation.

In light of continued market uncertainty, the Group is not in a position to provide full year guidance until such time as the overall impact of COVID-19 on the Group becomes clearer.

[elsa7878] 25/6/2020 07:51

CEO and CFO, who between them made £800,000 last year have generously supported the fundraising by putting in a combined £20,000!! That's confidence and commitment and called sharing your investors pain....

[masurenguy] 25/6/2020 07:19

25 June 2020
Hostelworld Group plc

Results of Placing and Subscription

Hostelworld, a leading global OTA focused on the hostel market , announces the successful pricing of its non-pre-emptive placing following yesterday's announcement. A total of 17,664,155 new ordinary shares of EUR0.01 each in the capital of the Company ("Ordinary Shares") (the "Placing Shares") have been placed by Numis Securities Limited ("Numis") and J&E Davy ("Davy", together with Numis, the "Joint Bookrunners"), at a price of 72.0p per Placing Share (the "Placing Price") and in addition 1,450,000 new Ordinary Shares ("Subscription Shares") have been conditionally subscribed for outside the Placing by an existing shareholder at the Placing Price ("Subscription"). Together, the Placing and Subscription of in aggregate 19,114,155 new Ordinary Shares raised gross proceeds of approximately £ 13.8m, subject to completion. The Placing Price represents a discount of 7.1% to the closing share price of 77.5p on 24 June 2020. The Placing Shares and Subscription Shares represent together approximately 19.99% of the existing issued ordinary share capital of the Company prior to the Placing and Subscription.

Immediately following Admission, the total number of voting rights in Hostelworld will be 114,684,933 . This figure may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the Company under the FCA's Disclosure Guidance and Transparency Rules.

Director participation

The following directors of the Company and other persons discharging managerial responsibilities ("PDMRs") have agreed to subscribe for the following number of Placing Shares at the Placing Price:

Name Number of Placing Shareholding Shareholding
Shares to be on Admission as a % of Enlarged
subscribed Issued Share
Capital on Admission
TJ Kelly 12,543 12,543 0.011%
Eimear Moloney 31,358 71,358 0.062%
Gary Morrison 18,814 18,814 0.016%

The Company believes that Aberforth Partners LLP and Premier Miton Group Plc each currently hold or have in the last twelve months held 10% or more of the ordinary share capital of the Company. For the purposes of UK Listing Rule 11 the Company therefore believes that they are, or may be, considered as related parties of the Company. Pursuant to the Placing, Aberforth Partners LLP has agreed to subscribe for 2,600,000 Placing Shares at the Placing Price for an aggregate consideration of approximately £1,872,000. Premier Miton Group Plc has agreed to subscribe for 2,220,000 Placing Shares at the Placing Price for an aggregate consideration of £1,598,400.

[nw99] 27/5/2020 08:20

Net cash EU 19m

[tole] 26/5/2020 13:45

Also having a look at this point and quite tempted here. Those big trades earlier seem to have cleared some stock. Volume picked up a bit too.

[nw99] 26/5/2020 12:36

A buy on the charts

[onjohn] 28/4/2020 20:49

Truck load of cash what I like

[tjbird] 28/4/2020 15:10

Lot of irish buying going here says my broker

[tjbird] 28/4/2020 15:08

Looking a bit tasty

[onjohn] 28/4/2020 14:44

124p in sight here

[onjohn] 28/4/2020 14:14

LOOK set to fly next

[bookbroker] 21/4/2020 08:26

Looks like this is going to stage a decent rebound, opening up of certain nations promising, but I’d be looking twelve months down the line, very little positive news going avaliable for some months but this is holding up fine, main market might tank before long but financial situation here positive.

[hibberts] 17/4/2020 12:24

Had a little dabble yesterday the company is well placed for a long recovery.

[bookbroker] 17/4/2020 10:16

Looks like a floor under tis now.

[onjohn] 15/4/2020 10:50

wont be long before it warns and halves