Ilirija d.d.: ADRs growth pace cools, cost inflation persists (NOT RATED)

Updating our model following the 9M24 results and rolling over our DCF, we see an updated valuation range of EUR 29.8-36.0/share, or a midpoint of EUR 32.9/share (EUR 36.3/share previously), for Ilirija. Looking at the 9M24 results: 1) we observe somewhat lower than expected price increases yoy in the hotel and camping segments; 2) we see that wage inflation remains a challenge; and 3) occupancy rates, while growing, have yet to converge with the pre COVID-19 levels. These are now reflected in our 2024-26E numbers, translating into c.7% and 14% lower EBITDA and net profit, respectively, compared to our previous update (May 2024). The 2025-26E median EV/EBITDA peer multiples have contracted mildly as well, capping the top of our valuation range. On our FY24E estimates, the stock is trading currently at 8.5x EV/EBITDA and a PER of 16.4x, or discounts of 20% and 7% vs. its peer medians, respectively. At our midpoint of EUR 32.9/share, the stock would trade at a 13% discount on EV/EBITDA and in line on PER, on our 2024E earnings.