Hostmore Share Discussion Threads

[theisland] 18/11/2021 17:07

Simon, sorry for my ignorance, but could you explain how Hostmore is a highly scalable business? I don’t know the sector well and I have always thought that only if you own the franchise it is a scalable business... if you don’t, like in Hostmore case, when you open new restaurants you have to duplicate most costs. Which are the fixed costs that makes it scalable, could you make some examples? Thanks loads if you take the time to reply! I’m genuinely interested in this opportunity and I’m trying to learn...

[simon gordon] 14/11/2021 10:53

Here's the 'dark kitchen' brand running out of some Fridays outlets via Deliveroo and Just Eat:

Jailbreak Chicken

[mashman] 13/11/2021 20:51

CEO comment last week to the press was that platform is in place and a robust pipeline of sites are already lined up. "good deals to be had' ' offered sites on very good terms by landlords' 'roll up our sleeves because the hard work begins here'
3 sites open, latest in Harrogate.

Bit worried about that Harrogate one, not exactly looking like a prime location....yet

[simon gordon] 13/11/2021 12:04

Maybe in 2023 with the estate at c.100 outlets, c.85 in 2019, and more focus on cost control and less competition they'd be hitting 14m. They do have a growth strategy with Fridays the cash cow to invest in 63rd which could probably be 100+ if it's a hit, still early days. Also they are planning to expand the Fridays brand, probably try and make it a bit more Five Guys with drive ins. Their marketing department are very good. So, for sure you have to pay for a little bit of potential.

I hold TRI and it has forecast free cash of 10m in '23 and it's market cap is nearly 200m and it's not a highly scalable business.

Have you compared MORE to its peers? The argument made by Numis and Edison is that MORE is cheaper than its peers: 6x EBITDA to 11x. I don't have access to notes on Fulham Shore, RTN and Loungers to see.

Cheers!

-

Edited:

According to Edison the forward p/e is 10.5x.

If they start proving up 2022 and expand both Fridays and 63rd then they would probably be on a single digit p/e for 2023.

I don't know what the forward p/e's are for the listed peers. Does anyone know?

[jtourer] 13/11/2021 11:55

I know it wasnt an IPO (before anyone jumps in and corrects me) but it did have an initial share price which it now seems was overly high, just like most of the IPO's of the last couple of years...

[theisland] 13/11/2021 11:39

Hi Simon, thank you for your answer, I think Edison numbers are correct. I did a double counting mistake, my bad... In any case, I’m not so sure that with 140 m market cap it’s such an obvious bargain with 10 m cash generation in a normal year. With all the selling pressure out there, I think it’s possible the bottom has still to be reached. Though For sure it’s a situation to be watched. Just my opinion...

[simon gordon] 12/11/2021 18:10

Hi The Island,

Have you had a look at Edison's numbers for 2019?

They have Capex at 11.3m. Net Interest 26.2m which I presume is leasehold payments. Net cash flow 10.6m and debt fell from 49.5m to 38.9m.

According to their projections net debt is forecast to be 26m at the end of 2022. I think they're investing in around 7 or 8 new openings a year which cost 750K to 1000K each, they've opened four in 2021.

[sphere25] 12/11/2021 15:15

A possible technical overhang play here then.

Place the Hostmore shares and the set up could be there for a nice bounce.

Stuck it on the watchlist and currently observing this ding dong around 110p. There is an iceberg sat on the bid at 110.5p vs an iceberg on the offer at 111p.

This is the first time the sellers have met any real resistance from the big fall down on start of trading on the 2nd November. On that day, the trades actually show the price hitting 150p, and if you look closer, it shows how erratic the price moves here could be going forward too - caution very much needed!

Easy to move 10% on nothing volume (as an example right now, could buy at 111p, but say the sellers don't clear out, the bid could get hit through multiple price points in one go and be down from 110p to 107.5p in a flash) with gaps and the spread widening massively out. I'm watching for large blocks getting placed, but this is going to be a very tricky one to catch.

The chart could make another leg down here and hard to know how many shares need placing, but it should be glaringly obvious where the support is once large blocks start getting placed.

If any absolute monster's hit the book, it becomes easier.

An interesting challenge.

Pop to loo and offer could be 120p too!

Let's see if any whoppers hit in the near term.

All imo
DYOR

[theisland] 12/11/2021 14:57

Hi everyone. Read a few commentators saying Hostmore generate lots of free cash flow. Reading the prospectus it is not so clear to me: they made 48 m in cash from operations in 2019, it’s a lot; but then subtract 1) interest expenses of 13 m, 2) maintenance capex 3.4 m, 3) payment of leases 23.7 m and it results in roughly 8 m of free cash flow in 2019. Market cap 140 m, price to fcf of 17 times. Not so cheap on historical free cash flow generation IMHO. Am I missing something? Thanks in advance to anyone would take the time to answer.

[jtourer] 12/11/2021 09:25

maurice -- I get it now thanks sorry for being unclever !

[ltinvestor] 12/11/2021 08:19

Seems very undervalued to me…nice tuck away at this price.

[mauricemonkey] 12/11/2021 00:54

There was no ipo.
The IIs didn’t buy into the non existent ipo.

It was a demerger. These funds held Elta and automatically got the Hostmore shares. How many times do we need to repeat this?

[jtourer] 11/11/2021 20:44

Rambutan - I'm confused ! So are we saying that the II's that have bought in at IPO bought in cheap and will flip the stock ?? Please clarify ?

[simon gordon] 11/11/2021 20:23

Video with the CEO - 11/11/21:

Hostmore have big appetite for expansion after making London trading debut

[simon gordon] 11/11/2021 20:00

Nice bullish hammer reversal candle today, though no heavy volume to back it up. Still, it indicates a low may have been put in:


free stock charts from uk.advfn.com

[simon gordon] 11/11/2021 11:56

High praise for the CEO from previous employees on the comments section:

LinkedIn - July 2021

[simon gordon] 10/11/2021 21:30

Rambutan,

Cheers!

That would be about 25% of the equity.

Looks like it could be placed for around 100p / 110p.

[rambutan2] 10/11/2021 21:09

I think that a lot of the shares need to change hands.
Crown Sigma is a UCITS fund of PE funds, so will have to sell.
Witan IT, another fund of funds, albeit with a bit more flexibility, will also be a seller.
Likewise the M&G stake.
So plenty of work for the brokers to be getting on with. imho

[jtourer] 10/11/2021 14:53

Quite a few trades today but price pretty flat still, I am positive this is being 'worked' by MM's...

[brummy_git] 10/11/2021 06:29

Professional investor Paul Scott of Stockopedia discussed Electra Private Equity & Hostmore (starts 57:40)

[simon gordon] 09/11/2021 11:27

Stephen Welker at 6.66% - here's his bio:

Partner & Director of Research

Mr. Welker is responsible for leading Sherborne Investors' research function, including identifying investments, establishing the turnaround thesis and participating in the management of the investment. Previously, he was a non-executive director of TGI Fridays and Electra Private Equity plc, and an advisor to F&C Asset Management plc. Prior to joining Sherborne Investors, Mr. Welker worked at Morgan Stanley on both real estate investment banking and principal investment transactions. He earned a BS in accounting from Washington and Lee University.

[simon gordon] 09/11/2021 07:03

Page 145 of the Prospectus, dated 15th October 2021, highlights who the existing shareholders are in MORE:

-Witan 13.2%
-FIL 11.03%
-M&G 9.25%
-Stephen Welker 6.66%
-Aviva 4.01%
-Crown Sigma 3.58%

If one or more of them want to sell then the price will drop to meet the buyer. If that's the reason for the fall, then once cleared it could bounce hard.

Director holdings:
-Robert Cook 3.3m shares (options?)
-Alan Clark 2.4 shares (options?)
-Gavin Manson 1.4m shares
-Neil Johnson 837,000 shares
-David Lis 130,500 shares

[mashman] 08/11/2021 23:34

Now add Crown Sigma

Aviva 4.2%
Mvg 9.2%
Fid 11 %
Witt 13.2%
Crown Sigma 3.58%

That's 42% of the cap hoovered up on the cheap. Once the boys have filled up we will head north and we can all travel with them :-)

[mashman] 08/11/2021 23:12

Good commentator Paul Scott, and seems very bullish on HOST

[jtourer] 08/11/2021 21:40

Glad it wasnt my imagination ! Sounds like another bunch of city parasites who expect fees to just roll in their direction for nothing really !