Melia Hotels: A summer season below expectations but nevertheless weighing excessively on valuation
Melia Hotels: (BUY, Fair Value EUR13,5 vs. EUR14,6 (+40%))A summer season below expectations but nevertheless weighing excessively on valuation
The summer season in Spain was somewhat disappointing. Indeed, whereas competition from Turkey, Egypt and North Africa has returned to the Spanish market since the beginning of the year, the last-minute commercial strategy put in place by the group was clearly not managed optimally. In addition, the weather conditions enjoyed by European countries over the summer months did not play in favour of Spain and Portugal as tourist destinations. As such, Q3 results, and also FY 2018 figures, are set to be lower than the forecasts still in place at the end of July. However, based on a more cautious stance in our estimates, the near-20% decline in the share price since mid-July and the current valuation, which remains that of a heavy-asset operator, seem difficult to justify to us. Buy maintained with a FV of EUR13.5.
Melia Hotels International is the parent company of a group engaged in the acquisition, management and operation of hotels. Co. operates its hotel network in Germany, Argentina, Brazil, Bulgaria, Cabo Verde, Chile, China, Costa Rica, Croatia, Cuba, Egypt, Spain, United States, France, Greece, Netherlands, Indonesia, Italy, Luxembourg, Malaysia, Mexico, Panama, Peru, Portugal, Puerto Rico, United Kingdom, Dominican Republic, Singapore, Switzerland, Tunisia, Uruguay, Venezuela and Vietnam under the followings brandnames: Paradisus Resorts®, Melia Hotels & Resorts®, TRYP Hoteles® and Sol Hotels & Resorts®.
Since 1996, Bryan, Garnier & Co has been growing with an absolute conviction that the investment banking landscape would experience a major revolution: most of the large local generalist banking groups will disappear to the benefit of a handful of global powerhouses, and an emerging group of independent, highly specialised boutique investment banks.
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