Scandic Hotels (Buy, TP: SEK46.00) - Promising signs of recovery

Scandic Hotels’ Q2 and the outlook for the high-season summer suggest that the recovery is materialising. We consider Scandic Hotels a prime beneficiary of a post-pandemic recovery in Nordic hospitality demand given its leading footprint, with our 2023 forecasts suggesting it can achieve its financial target of an 11% EBITDA margin on Nordic RevPAR still 8–15% below 2019. We reiterate our BUY and SEK46 target price.

Scandic Hotels (Buy, TP: SEK46.00) - Reopening driving occupancy

Q1 was weak, as expected. However, high cash burn is guided to fall as occupancy recovers, setting the scene for positive cash flow again in Q3e. We consider Scandic Hotels a prime beneficiary of a post-pandemic recovery in Nordic hospitality demand given its leading footprint, with our 2023 forecasts suggesting it achieves its financial target of an 11% EBITDA margin on Nordic RevPAR still 8–15% below 2019. We see further potential in an even longer-term scenario. We reiterate our BUY and SEK46...

Scandic Hotels (Buy, TP: SEK46.00) - Risk/reward turning more positive

With Scandic Hotels securing financial headroom until 2023–2024e, the risk/reward has turned more positive again and we have upgraded the stock to BUY (HOLD), seeing the company as a prime beneficiary in a post-pandemic recovery in Nordic hospitality demand given its leading footprint. We have lifted our target price to SEK46 (31), and moved our valuation base to 2023e, when we see Scandic matching its financial target of 11% EBITDA margins on a Nordic RevPAR level still 8–15% below 2019, sugges...

Scandic Hotels (Hold, TP: SEK31.00) - Positive, but low margin for err...

Scandic Hotels’ Q4 was weak (in line with expectations), with its high cash burn seen decreasing as occupancy recovers during H1e. We still believe Scandic has headroom in its financial resources as it is in discussions to strengthen them further with its larger shareholders. We see lower risk in this than the now-successfully completed landlord discussions, with our 2021–2023 recovery scenario broadly intact. We retain our HOLD with a raised SEK31 (26) target price.

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Scandic Hotels (Hold, TP: SEK26.00) - Waiting for the dust to settle

With occupancy forecasts for early 2021 heading lower, landlord lease negotiations take centre stage, with concessions already indicated adding to Scandic’s financial headroom. We reiterate our HOLD and SEK26 target price, awaiting clarity on the legal implications of the landlord talks and their potential impact on Scandic’s footprint. We believe it can weather the turmoil and has the potential to become a true Covid-19 recovery case, though from a 2023e perspective.

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Scandic Hotels (Hold, TP: SEK26.00) - Uncertain landlord discussions

Scandic Hotels Q3 was better than feared, but renewed lockdowns suggest a slower recovery. Landlord discussions about lease terms are a natural step, but have uncertain outcomes given their legal implications; thus, we reiterate our HOLD with a SEK26 (34) target price, awaiting clarity. We still see Scandic Hotels having the financial headroom to weather the turmoil with the potential to become a true Covid-19 recovery case, something requiring a 2023 perspective, though.

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Scandic Hotels (Hold, TP: SEK34.00) - Market in normalisation mode

While travel restrictions have hit hard, we already see the start of market normalisation, with August Nordic RevPAR down 56% YOY (Scandic Hotels-weighted), compared to Q2 down 83%. Weak short-term demand implies a substantial loss in 2020e, while we see a return to positive adj. EBITDA in 2021e, positive FCF in 2022e, and Scandic Hotels meeting its targets by 2023e. We believe it has the financial headroom to weather this scenario, now operating from a relative point of strength. Given our stre...

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Scandic Hotels (No_rec, TP: SEK) - Adjusting to new reality

The Q1 results were in line with the updated guidance, with focus already on the ongoing refinancing in Q2 giving a liquidity headroom towards end-2021e even in a its pessimistic recovery scenario. Key shareholder support and its own efficiency measures suggest Scandic Hotels should emerge from the Covid-19 crisis in a position of relative strength. Owing to DNB Markets’ role in the rights issue, we have no recommendation, target price, or estimates.

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Scandic Hotels (No_rec, TP: SEK) - Recommendation withdrawn

Owing to DNB Markets’ role in the rights issue, we have withdrawn our recommendation, target price, and estimates.

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Scandic Hotels (Buy, TP: SEK62.00) - Closed markets hitting hard

Travel restrictions have hit Scandic Hotels hard, raising the variable cost base. Low short-term demand implies a substantial loss in 2020e, but more limited cuts in 2021–2022e in a normalisation scenario. Recent ownership changes, with the Olsson family now controlling 25%, should be a positive if additional resources are required, and we believe it should emerge from the crisis in a position of relative strength. We reiterate our BUY, but have cut our target price to SEK62 (120).

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Scandic Hotels (Buy, TP: SEK120.00) - Travel restrictions impact

With corporate travel policies becoming restrictive as the coronavirus spreads, Nordic hotel demand is being hit and we now model RevPAR down 25–30% over the high season in Q2–Q3 YOY, with a normalisation thereafter. This has a significant impact on our forecasts, but we still expect Scandic Hotels to generate healthy FCF in 2020e. We reiterate our BUY but have cut our target price to SEK120 (135).

Scandic Hotels (Buy, TP: SEK135.00) - Pipeline adj EBITDA margin >17%

Scandic Hotels’ CMD supported our view that its room portfolio pipeline is the main value driver for the forecast period, with added opportunities in portfolio management (focus on low-performing hotels) and new growth initiatives (Scandic Go launch). Scandic’s opting to report IFRS16 adjusted will highlight the business quality and we have updated our forecasts accordingly. We reiterate our BUY and SEK135 target price.