February 25, 2025 10:27 GMT
TRANSPORTATION: Accor; 8y FV
TRANSPORTATION
(ACFP; NR/BBB-/BBB- Pos)
Likely to price through FV but we are tad confused why higher margin, similar double-digit growing and higher rated IHG is priced +10bps wide of Accor. Regardless levels among the three hotel operators are interesting - concerns will be if a Europe led slowdown in discretionary spend is coming.
exp. €500m 8y +155a vs. FV +125 (-30)
- Accor has 45% exposure to Europe and North Africa, another 45% in middle East, Africa and APAC and only 10% to Americas. That is within Premium, mid and economy rooms which is 85% of the group, 15% in luxury. In comparison IHG is US heavy (50%) and generally considered more premium.
- We have swapped over the sterling Whitbread curve - the weakest of the three hotel operators on its nearly entire UK and mid-market (through flagship Premier Inn) exposure. We have also swapped over the IHG28s - for reference.
- easyJet we have included as it is generating 27% of its bottom line from the holidays business. No firm view but we are small biased to see it a tad rich.
- Accor is n/g 2.2x/3.3x levered excluding the €1.1b in hybrids (targets net <3.0x)
- including 50% equity treatment on hybrid n/g 2.7x/3.8x
- FY25 (to Dec) outlook issued last week is for EBITDA growth of +9-12% (FY24 was +12%)
- given leverage in target upside directed to equity holders - €700m/yr in equity pay-outs the last two years
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