her - Snowworld

SnowWorld
Company report
Netherlands/ Hotels, Travel & Tourism
Investment Research
Reason: Initiation of Coverage
Buy
15 May 2014
High cash generating indoor ski resorts
from
7.93
Share price: EUR
closing price as of 14/05/2014
Target price: EUR
9.80
Reuters/Bloomberg
SNOW.AS/SNOW NA
Daily avg. no. trad. sh. 12 mth
Daily avg. trad. vol. 12 mth (m)
Price high 12 mth (EUR)
n.a.
n.a.
8.30
Price low 12 mth (EUR)
7.85
-0.6%
n.a.
Abs. perf. 1 mth
Abs. perf. 3 mth
Abs. perf. 12 mth
Key financials (EUR)
Sales (m)
EBITDA (m)
EBITDA margin
EBIT (m)
EBIT margin
Net Profit (adj.)(m)
ROCE
Net debt/(cash) (m)
Net Debt Equity
Net Debt/EBITDA
Int. cover(EBITDA/Fin.int)
EV/Sales
EV/EBITDA
EV/EBITDA (adj.)
EV/EBIT
P/E (adj.)
P/BV
OpFCF yield
Dividend yield
EPS (adj.)
BVPS
DPS
23
3
15%
09/13
25
9
33.7%
5
18.2%
2
6.3%
45
nm
5.3
3.6
2.6
7.7
7.7
14.2
12.0
5.2
23.6%
0.0%
0.58
1.33
0.00
09/14e
26
9
33.4%
5
18.6%
2
6.8%
39
nm
4.5
4.1
2.4
7.3
7.3
13.1
11.7
3.2
18.0%
0.0%
0.68
2.51
0.00
09/15e
27
9
33.9%
5
19.6%
3
7.9%
34
3.4
3.7
4.8
2.1
6.3
6.3
10.9
9.3
2.4
22.7%
3.2%
0.85
3.36
0.26
Price for SNOWWORLD (NL)
9.2
9.0
8.8
8.6
8.4
8.2
8.0
7.8
7.6
Source : Factset
9
SnowWorld operates two indoor ski resorts in the Netherlands with a total snowcovered area of 50,000 square meters. In addition to the ski slopes, the indoor
centres also have bars and restaurants, a fitness and wellness centre, a winter
sport retail outlet and in Landgraaf also a hotel and outdoor park.
9
Only in the book year ending September 2010 revenues and results were hit by the
economic crisis. Over the last three years, results have kept up relatively well
despite still reluctant consumer spending. The company has optimised its
organisation over the last couple of years and took initiatives to generate more
revenues in the relatively quiet summer period. There is a strong relationship
between GDP and spending on leisure and we therefore expect positive effects
from the gradually improving economic environment in the Netherlands. On top of
that, the extension of the third slope in Zoetermeer, which is expected to be
finalised in the third quarter of 2016, will give a boost to revenues and margins.
9
SnowWorld currently has a high level of debt, as it owns both facilities in the
Netherlands and made several large investments in recent years. As the company
generates a healthy free cash flow of about EUR 5-6m per annum on average we
assume that the company’s financial position will significantly improve in the next
few years. SnowWorld intends to start paying dividend as from 2014/15 with a payout ratio of 30% of net profit.
9
Due to the fact that several ski facilities are already closed or are struggling to
make a decent profit, it is not necessarily the case that every indoor ski resort will
be a success. Entrepreneur Koos Hendriks seems to have found a successful
formula by focusing on the creation of winter sport experience. The company plans
to use this experience to expand through acquisitions and the construction of new
indoor ski resorts in Paris and Barcelona. It also offers consultancy services to third
parties who are planning to build an indoor ski resort.
9
Our base case scenario takes into account the current activities in the Netherlands
and the planned extension of the third slope in Zoetermeer. This will boost the
number of visitors and given the high operating leverage will clearly fuel margin
improvement. This scenario suggests a fair value of EUR 9.80 per share and we
therefore initiate our coverage on SnowWorld with a Buy rating. We also used DCF
models for the planned new projects in Paris and Barcelona, which can be both
fully operational as from September 2016 at the earliest (permits and financing still
have to be obtained). Both projects could add about EUR 1.00 per share to the
company’s valuation, further increasing the potential upside.
n.a.
Market capitalisation (EURm)
Current N° of shares (m)
Free float
7.4
Feb 14
SnowWorld is the leading operator of indoor ski resorts in the world with more
than 15 years of experience in successfully building and operating indoor ski
resorts. The company plans to use this experience to expand in the Netherlands
and in Europe. SnowWorld will benefit from the improving Dutch economy and
the extension of one of its slopes will give a boost to revenues and margins in
book year 2016/17. Our base case scenario suggests a value per share of
EUR 9.80 hence our Buy rating. The indoor ski resorts in Paris and Barcelona
could add about EUR 1.00 each, further increasing SnowWorld’s potential value.
Mar 14
SNOWWORLD
Apr 14
Stoxx Travel & Leisure (Rebased)
Shareholders: Hendriks Beheermaatschappij 68%;
Value8 14%; J.P. Visser 3%;
For company description please see summary table footnote
Produced by:
Distributed by the Members of ESN
(see last page of this report)
May 14
At
End
Analyst(s): Johan van den Hooven
+312 0 5508518
[email protected]
For important disclosure information, please refer to the disclaimer page of this report
All ESN research is available on Bloomberg (“ESNR”),
Thomson-Reuters, Capital IQ, FactSet

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