MELIÃ HOTELS: 3Q'19 ESTIMATES AND T.P. CUT (ANÃLISIS BANCO SABADELL)
3Q’19 Results preview and cut to estimates. We maintain our BUY recommendationWe forecast weak 3Q’19 results (to be released on 07/11), affected by the poor performance in LatAm (~40% of EBITDA), which will mar the solid performance in the Urban business (~32%) and to a certain extent in the Spanish resort business (~23%) thanks to the strong domestic demand. Thus, group EBITDA (excl. capital gains) would go from +1.3% growth in 2Q’19 to -2.3% in 3Q’19. Added to the weakness in LatAm (problems in the Dominican Republic) are the doubts surrounding Thomas Cook and Catalonia, leading us to cut EBITDA’19 by -4% and by -9% in 2019-21. We cut our T.P. to € 8.70/sh. (-21% vs. previous; +19% upside). After falling -24% YtD in 2019 (-15% vs. the sector), MEL is trading at a -35% discount to its historical average in EV/EBITDA (not seen since 2008, despite the fact that debt is now -40% lower).
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®.
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