NH HOTEL ...it's not all about Coronavirus
Please find here a trade idea on a name that perhaps may sound “tricky” in this very moment, but please, have a look to my rational to check if it makes sense for you.
NHHSM 3 ? 10/01/23 XS1497527736 very troubled sector because of Coronavirus outbreak …but…
Company Issued a more than good set of results by the end of February (I leave you a resume here below) and it’s true that it would be difficult to repeat in 2020 because of Coronavirus impact that has not been estimated yet but Company has a 0.6x leverage, the stock has a marketcap of ~2bn which represents 7x Ebitda (and the stock is unlikely to go further down if we consider that the Company has a lot of real assets) .
During the last conf. call, management let the door open to a possible call of the bond in the “short term”, I doubt that in case it will be earlier than 10/1/2020 because, as said, it still do exist a big “question mark” over Coronavirus situation …would it be good if Company call the bond by October? Yes… Would it be good if Company won’t do it? Yes too! In my opinion fundamentals of Company are more than comfortables to bear with whatever scenario.
Please find here the last number issued by the Company:
- Sales: 4Q2019 €461mm; FY 2019: €1.718bn +6.1% YoY
- Ebitda: 4Q 2019 €85.4mm; FY 2019 €249.1mm +11.7% YoY
- Margen Ebitda: 4Q2019: +18.5% ; FY2019 17.3%
- EBIT: 4Q2019 €56.7mm; FY2019 €179.1mm +17.1% YoY
- Net profit: 4Q2019 €26.1mm; FY2019 €100mm +16.4% YoY
- Cash flow from operation activities: €246mm (84% Ebitda)
- RevPar: +4.9% ADR which means +5.4% vs 4Q2018
All that said... In my opinion the current weakness of the bond would be a good situation to take advantage of