Investing Into Tourism Industry

Investing Into Tourism Industry
InterCapital Securities Ltd.
Oslo Stock Exchange - The right choice for
Shipping, Offshore and Energy companies
Leading market positions in certain sectors
Energy
Shipping
Seafood
2nd largest
in Europe
Number 1 worldwide
in marine
transportation (number
Number 1 worldwide
(number of companies)
of companies)
2nd largest
worldwide in
oil service
(number of companies)
4
(number of companies and
market cap)
Zagreb Stock Exchange - The Right Choice for
Hospitality and Leisure Companies
Above average presence of the sector on ZSE
With about 30 actively traded shares, tourism represents more than 8% in the total equity market capitalization on the Zagreb Stock Exchange.
This beats other major European markets both in terms of the number of listed companies as well as their share in the total market cap.
Rank
33
Market cap
(HRKm)
Company
1
Valamar Riviera
3,013
2
Plava Laguna
2,732
3
Maistra
2,659
4
Liburnia Riviera Hoteli
1,211
5
Turisthotel
880
6
HUP - Zagreb
876
7
Arenaturist
753
8
Solaris
485
9
Imperial
318
10
Ilirija
232
11
Hoteli Makarska
229
12
Suncani Hvar
196
13
Hoteli Brela
151
14
Hoteli Maestral
144
15
Hotel Dubrovnik
142
16
HTP Korcula
105
17
Hoteli Tucepi
96
18
Olympia Vodice
94
19
Dubrovacko Primorje
60
20
Jelsa
50
21
Hoteli Zlatni Rat
44
22
HTP Orebic
43
23
Hoteli Vodice
42
24
Apartmani Medena
38
25
Hotel Medena
32
26
Hoteli Baska
24
27
Hoteli Haludovo
21
28
Palace Zagreb
14
29
Hoteli Jadran
11
30
Hoteli Zivogosce
9
31
Hoteli Podgora
5
32
Helios Faros
3
33
VIS
2
Source: ZSE, Bloomberg
5
35
(left) % of tourism companies in total market cap
10%
(right) Number of issues
30
8,1%
8%
25
20
6%
13
4%
15
10
10
2,1%
2%
4
5
3
0,6%
0,5%
1
0,5%
2
0,3%
0,1%
0,0%
5
1
0,0%
0
0,0%
0
0,0%
Austria
Hungary
0%
0
Croatia
Greece
Spain
France
Poland
UK
Turkey
Germany Portugal
Accommodation capacity clearly lacking size in
global terms
Rank
2014
Company
Name
NAT
Rooms
in hotels
1
IHG
GB
710,295
2
Hilton Worldwide
USA
708,268
3
Marriot International
USA
701,899
4
Wyndham Hotel Group
USA
660,829
5
Choice Hotels International
USA
504,808
6
Accor
FRA
482,296
7
Starwood Hotels & Resorts
USA
346,599
accommodation in hotels, Croatia as a
8
Best Western
USA
302,144
whole still doesn’t come close to the
9
Home Inns
CHI
296,075
10
Jin Jiang (inc. Louvre Hotels)
CHI
241,910
…
…
Leading global hotel players measure
hundreds of thousands rooms in hotels.
With less than 80 thousand units of
major players.
… …
22
Croatia (country as a whole)
HR
77,312
100
Plava Laguna (inc. Istraturist)
HR
12,657
116
Maistra
HR
11,232
154
Arenaturist
HR
8,348
186
Valamar Riviera
HR
7,114
Source: Crotian Bureau of Statistics, Hotels Magazine, companies’ reports
6
The number of rooms in hotels among
the largest Croatian companies doesn’t
go above 13 thousand.
Tourism sector outperforming the market in the last
2 years
Tourism has been one of the rare propulsive sectors on the Zagreb Stock Exchange in the past couple of years.
Although the general blue-chip index - CROBEX, recorded sluggish performance, CROBEXturist has risen by more than 100% in the shown period.
250%
200%
Maistra +170%
150%
CROBEXturist +119%
100%
Plava Laguna 90%
Arenaturist +83%
Valamar Riviera +72%
50%
0%
CROBEX -5%
-50%
-100%
18-Oct-13
18-Jan-14
Source: Bloomberg
7
18-Apr-14
18-Jul-14
18-Oct-14
18-Jan-15
18-Apr-15
18-Jul-15
18-Oct-15
Strong Global Growth, Europe leads in size
8
Resilient growth of FT arrivals, strong
e x p e c tat io ns a h e a d
Future growth through inertia?
4,8%
Horwath’s 2013 - 2020 estimated growth rate
Growth through inertia
Growth as a consequence of:
Croatian paradox of the
Arab Spring
absence of crisis
Greek crisis
Period of reaching the pre-war levels
63
65
66
2013
2014
60
43
45
47
48
2003
2004
51
52
2005
2006
55
56
55
56
2007
2008
2009
2010
39
32
31
27
22
13
1995
1996
1997
1998
Source: Horwath
9
1999
2000
2001
2002
2011
2012
Investments underpinning substantial revenue growth
Years 2013 and 2014 have marked the beginning of a new investment cycle among the largest tourism companies in Croatia.
Historically, companies that invested heavily by 2009 have been recording strong revenue growth in the last few years.
Valamar Riviera
1100
1000
900
Plava Laguna (including Istraturist)
Revenue
1100
CAPEX
1000
Revenue
CAPEX
900
800
800
700
700
600
600
500
500
400
400
300
300
200
200
100
100
0
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
0
2005
2006
2007
2008
Maistra
1100
1000
900
2009
2010
2011
2012
2013
2014
2011
2012
2013
2014
Arenaturist
1100
Revenue
1000
CAPEX
900
800
800
700
700
600
600
500
500
400
400
300
300
200
200
100
100
0
Revenue
CAPEX
0
2005
2006
2007
10
2008
2009
2010
2011
2012
2013
2014
2005
2006
2007
2008
2009
2010
Operators base different strategies on similar
f o u n d ati on s
Most of the shown companies have a similar size on the market (roughly HRK 2.5-3b market cap) and they all record above 25% EBITDA margin coupled with
revenue growth (Plava Laguna’s low revenue CAGR is due to the change in the companies under consolidation).
50%
Market capitalization (Valamar Riviera = HRK 3b)
45%
40%
EBITDA margin (2014)
[CELLRANGE]
[CELLRANGE]
35%
30%
[CELLRANGE]
[CELLRANGE]
25%
20%
15%
10%
5%
0%
0%
2%
4%
6%
8%
10%
2008 - 2014 revenue CAGR (Plava Laguna up to 2013)
Source: InterCapital research, companies’ reports, Bloomberg
11
12%
14%
16%
Various return profiles stemming from specific
mgmt. styles
Hotel operators are usually divided into pure asset light players, mainly focused on franchise and contract models, and high operating leverage players, as most
of their portfolio is run through leased and owned hotels.
The capital employed tied up with the latter group is much higher and therefore it is not a surprise to see lower ROIC.
80%
[CELLRANGE]
60%
[CELLRANGE]
ROIC
40%
20%
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
0%
[CELLRANGE]
-20%
0%
10%
20%
30%
40%
50%
60%
Owned+Leased Properties (as % of total units)
Source: InterCapital research, companies’ reports, Bloomberg
12
70%
80%
90%
100%
Massive contribution o f tourism t o Croatia’s G D P
Impact of tourism on Croatia’s GDP
By making 28% of Croatia’s GDP (both directly and indirectly) with an
12,5
Outer circle = 2014
Inner circle = 2013
12,1
upwards trend, tourism is growing its footprint as a key industry in
Croatia.
15,7 15,8
Tourism directly (%)
Tourism indirectly (%)
Other (%)
This percentage puts Croatia well above other European and
72,2
Mediterranean peers, with the closest followers being Cyprus (21%)
71,7
and Montenegro (20%).
Total impact of tourism on GDP by country and region
30
28,3
25
2014
21,3
20,0
20
17,9
2013
17,3
15,7
15,2
15,2
15
13,1
12,7
12,0
10,5
10,1
10
8,9
8,9
9,2
France
Germany
Europe
9,8
5
0
Croatia
Cyprus
Montenegro
Source: World Travel & Tourism Council
13
Marocco
Greece
Portugal
Spain
Tunisia
Bulgaria
Slovenia
Turkey
UK
Italy
World
Always Ahead
InterCapital Securities
Ltd
Croatia
Masarykova 1
10000 Zagreb
www.intercapital.hr
Bloomberg: INKA <GO>
Tonći Korunić
Senior Partner
T: +385 (0)1 4825 860
M: +385 (0)98 318 777
E:
Tonci.Korunic@InterCap
ital.hr
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