Rollo, of Goldman Sachs, also forecast EBIT of £226m (+10%), pre-tax profit of £213m (+10%) and dividend per share of 21.5p (+10%).
“Within this, we assume EBIT for Hotels & Restaurants of £193m (+7%) and Costa of £46m (+27%).
“We expect a comforting outlook statement with improving trends in the UK hotel market tempered by strengthening competition. At Costa, like-for-like sales of +3% in Q2 were solid, but the company will likely save any meaningful announcements here for its Costa investor day on 12 December.”
Rollo added: “The shares have traded off recently, but are still on 17x P/E and 10x EV/EBITDA for cal 2014 (10% higher adj. for pension), and we think the shares need forecast upgrades for outperformance.”
He predicted Whitbread’s like-for-like sales growth would be 2.5% (Premier Inn +3%, Restaurants +1.5% and Costa +3%).
“We estimate that every 1% on LfLs is c. £10m to EBIT, with 2% needed to cover cost inflation. We also assume 4,000 new hotel rooms (we estimate every 1k rooms is £3m to EBIT), and 330 new Costa shops (we estimate every 100 shops is £5m to EBIT). Consensus is at EBIT of £421m, PBT of £391m, and EPS of 168p, so a little ahead of us.”
Regarding the Hotels & Restaurants arm, Rollo said: “At its interim management statement in August, Whitbread reported H1 LfL sales of +2.9% for Premier Inn and -0.1% for Restaurants, which was a good result considering tough comps around the Olympics. It underperformed its comp set in
Q2 by 2%-pts as competitors (namely Travelodge) regained some of the lost ground last year, and we expect this trend to continue into H2, with Premier Inn apparently not enjoying the full recovery being seen in the UK regional hotel market. Total sales were +12.1% and +2.5%, respectively.
“We forecast H1 EBIT of £193m, implying a margin drop of 45bps driven by the higher weighting of leased hotels. Note that this performance would be much better than H2 2013, when EBIT grew by only 3% and margins dropped 140bps. At the IMS it had opened 1,270 rooms and still expected 4,000 openings in the full year.”
Regarding Costa, he said: “Whitbread reported strong like-for-like sales for Costa at +5.7% in H1, although decelerating to +3% in Q2 (the shift of half term had a c.1% impact, and the particularly hot weather in July also had a dampening effect).
“Total sales were +20.8% in the half. We forecast H1 EBIT of £46m (+27%), and a 60bps margin improvement. Costa opened 70 shops in H1, and still expected to open 300 in the year.”
