Hostmore – better than expected first half, but business now lowers broker’s Target Price to 80p
The interim results, from this 90-unit hospitality group, give clear evidence that it is having to cope with higher prices, supply chain hassles and staff shortages that are helping to slow down its expansion progress.
The company takes in the chain of ‘Fridays’ and the ‘63rd +1st’ cocktail bars and restaurants that are now operating across the country.
The hot weather did not help second half
In June alone more than 1m customers visited the group’s various brands – that in itself was an impressive figure – but since then trading operations have tensed somewhat. The hot weather did not help, while the prospects of higher energy costs are obviously impactive.
The half-time figures for the 26 weeks to 3rd July, showed that sales were 147% better at £98.5m (£39.9m) while EBITDA was up 143% at £7.1m.
Brokers lower estimates
Analysts Nigel Parson and Michael Clifton at the group’s corporate brokers finnCap still rate the shares as a Buy, but with a lowered Target Price of 80p (125p) a share, compared to the current price of just 22.5p.
Their current year estimates suggest an increase in revenues from £159.0m to £205.1m, with a loss of just £2.1m (£6.9m profit).
These figures show that the group now has to have a much tighter control on costs, with the brokers estimating £220.4m of sales next year, while expecting a fractional loss of £0.4m.
But predictions for return to profits in 2024
The analysts now predict £239.0m revenues in 2024, with £4.1m of profits and 2.6p of earnings per share.
On those forecasts the group’s shares are now a more medium-term play as operating pressures ease and customers return.