Pandox (Buy, TP: SEK170.00) - Light at the end of the tunnel
While the Q1 results were broadly in line with our forecasts, increased Covid-19 lockdown effects have led us to cut our 2020–2022e EPS. Pandox stated its costs (including financing) have been reduced, and are now on a par with income (SEK2bn/year from minimum and fixed rents). As profit is hovering around zero, even in the current (Q2) weak market, and the company has SEK4.3bn of cash equivalents and unutilised credit facilities, we expect it to emerge from the Covid-19 crisis with just some lost earnings. We reiterate our BUY, but have cut our target price to SEK170 (180).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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