Pandox (Buy, TP: SEK150.00) - Business demand rebounding
Pandox’s Q2 EBIT beat our forecast and Infront consensus in Operator Activities ([where Pandox owns and operates hotels directly) and Property Management (where it only owns hotels, with external operators), as increased business demand boosted RevPAR, especially in Germany, where most of its hotels are business-oriented. Asset write-downs of 0.8% were reported in Q2, as yields increased. We continue to like Pandox’s lower than peers NIBD/EBITDA and pure bank-based financing, implying a lack of bond refinancing risk. We reiterate our BUY and SEK150 target price.Pandox AB is a hotel property company in northern Europe. The Company's principal business activities are the active ownership, development and leasing of large hotel properties in Stockholm, Gothenburg and Malmo, in Swedish regional and university cities and in capitals and other major cities in northern Europe. The Company's hotel properties are situated in such locations as city centers, airports and convention centers. Pandox' hotels are in the upper-medium to high price range and focus on the business and leisure segment. The Company's portfolio is comprised of 44 hotel properties in five countries (Sweden, Denmark, Germany, Belgium and the United Kingdom) totaling 8,143 rooms. The average number of rooms per hotel is 188. The Company's hotels are operated by such hotel operators as Hilton Group plc, Choice Hotels, Rezidor SAS, Best Western, Elite Hotels and First Hospitality, among others.
DNB Markets is the investment banking arm of DNB Bank ASA and is focused primarily on the Nordic region, as well as internationally on niches such as global shipping, energy and related services, and seafood. DNB Markets offers services in FICC, Equities and Investment Banking advisory from offices in Oslo, Stockholm, London, Singapore and New York. Equity research coverage is offered on c250 Nordic companies. DNB was ranked no.2 in Extel Nordic Research 2017. The DNB Markets’ Credit and FICC Macro & FX Research teams are repeatedly highly rated by Prospera Nordic Institutional Investor Surveys.
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