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雷达卡
Travel & Leisure
Lost cause or bargain basement: pt 3
Since 4Q07 we have cut 2009/2010 EPS forecasts by 32% and 43%, respectively.
We forecast negative EPS growth for 2009 and 2010. On average our forecasts
are 13% and 23% below Reuters consensus for 2009/10. Given our forecasts, we
struggle to construct a positive near-term sector-wide investment case.
Table 1 : Forecast summary – Leisure sector, Jan 2009
Year 2009F 2010F
Average sector EPS change Jan 2009 vs 4Q07 -32% -43%
Average sector EPS growth yoy -17% -6%
Average sector EPS diff vs Reuters consensus -13% -23%
Pubs EPS change vs 4Q07 -36% -46%
Catering EPS change vs 4Q07 9% -8%
Hotels EPS change vs 4Q07 -40% -53%
Tour operators EPS change vs 4Q07 3% -2%
Cruise EPS change vs 4Q07 -51% -67%
Betting EPS change vs 4Q07 -47% -55%
Source: ABN AMRO forecasts
Sector forecasts reduced again
In January 2008, we cut EPS estimates by 10-15% to reflect lower 2009 GDP growth (2% vs
3%). In June, we cut EPS estimates by 10-15% to reflect 2009 GDP growth of 1%. In this
note, we cut 2009/10 EPS estimates by 15-25% to reflect the likelihood of negative GDP
growth in 2009/10. On average, our 2009/10 EPS estimates are 32-43% lower than they
were at the end of 2007, and for 2009/10 we forecast -17% and -6% EPS growth,
respectively. In light of our earnings forecast revisions, we have also re-assessed a number
of dividend policies. To varying degrees we lower our dividend payment forecasts for pubcos,
bookmakers and cruise operators, which reflects earnings risk and balance sheet/refinancing
issues. We assume flat dividends from hotels, which reflects their stronger balance sheet
positions. We continue to forecast dividend growth at Compass and the tour operators.
ABN AMRO view: upside and downside risks finely balanced
We believe there is still downside share price risk for a sector whose earnings tend to be
mid-/late cycle rather than early cycle and where there is, to varying degrees, fixed capacity
and operational as well as financial gearing. We expect a challenging 2009 potentially
extending into 2010. We think the rebound in sector share prices could run out of steam.
Three Buy ideas
IHG (Buy, TP 770p) stands on a trough 2010F PE of 12x and looks strategically well positioned
for long-term growth with a sound balance sheet. By stripping out the group’s remaining bricks
at book value (a 1998 valuation), the core managed and franchised business is on a trough
2010F PE of 7x. Tui Travel and Thomas Cook (Buy, TP 300p on both) are both benefiting from
merger cost synergies, a changed industry structure which we believe changes the forward
pricing dynamic, and stand on single-digit PE multiples (2009F 6-9x).
Contents
Moving into negative GDP 2
The sector is consumer exposed with operational and financial gearing, and its
earnings tend to be mid/late cycle. We see a challenging trading outlook for
2009/10. Consensus earnings have fallen over the last six months, but we expect
further reductions in 2009/10.
2
Summary and key picks 2
Sector performance 3
EPS forecast changes 4
Our forecast EPS downgrades since 4Q07 5
New fair value ranges and target prices 8
Debt considerations 8
Pubcos – what the debt market is saying 9
Dividends 11
Leisure trends into and out of a recession 12
Company sections 15
Hotels 16
Accor 16
InterContinental Hotels 24
Whitbread 32
Catering 40
Compass Group 40
Travel 50
Carnival plc 50
Royal Caribbean 58
Thomas Cook 66
TUI Travel PLC 74
Pubs 82
Enterprise Inns 82
Greene King 90
Marstons 98
Mitchells & Butlers 106
Punch Taverns 114
Gambling 122
Ladbrokes 122
William Hill 130
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