Arena Hospitality Group: A promising start to the season (downgraded to HOLD)
We have downgraded Arena Hospitality Group (Arena) to HOLD (from Buy), following the stock’s strong post-COVID-19 recovery, with a new price target (PT) of HRK 361/share. The indications are that Arena will have a good, albeit still transitional, summer, with more last-minute guests and a longer season, as the vaccination drives continue across the continent. Tourists are making ad hoc decisions, reflected in the lower bookings overall, but management is confident enough in the demand thus far to make all its Croatian inventory available for the summer peak. Our two-pronged investment case has not changed: Arena’s lower dependence on air passengers suits a more risk-adverse environment, while repositioning properties caters better to the tastes of modern travellers. Despite the downturn, Arena has continued investing into its properties, which should drive a 2019-23E Croatian ADR CAGR of over 4%, on our estimates. As its capex cycle winds down, we see the business returning to positive FCFs, allowing for the resumption of dividends and/or buybacks in the foreseeable future.
WOOD & Company is the leading investment bank in Emerging Europe. Founded in 1991 and head-quartered in Prague, our footprint spans the region and touches investors around the globe.
A pioneer in Emerging Europe, WOOD executed many of the first CEE equity trades and landmark investment banking transactions. Our electronic trading platform was the first in the region, and remains the best. We are continually expanding our relevance and reach in these ever-evolving markets.
Our equity market share reflects our stature: 7% in Warsaw, 20% in Bucharest, 16% in Hungary, 40% in Prague and 5% in Vienna. Our distribution is unparalleled, with the largest salesforce in the region, servicing a uniquely diverse investor base.
We couple local expertise with a truly international perspective. With offices on the ground in the region, and in key financial hubs such as London and Milano, we are never far from our clients and we remain at the forefront of what’s afoot in the CEE emerging and frontier landscape.
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