DAVY VIEW

Dalata reported interim results this morning with strong revenue growth, a very impressive margin performance, an uplift in portfolio valuation and confirmation of an interim dividend (4c). The outlook statement strikes a confident tone. A beat to our H1 estimates and encouraging detail on margins indicates that the risk to our current year forecasts is again skewed to the upside. Dalata trades on 7.7x FY24 EV/EBITDA (6x ex-leases), 10x P/E and offers a c.13% free cash flow yield. Its estate is valued at €1.6bn versus its freehold EV (market cap plus bank net debt) of €1.07bn. We believe the valuation discount is not merited given: i) strong underlying performance; ii) significant optionality provided by its balance sheet; iii) a strong management team with a proven track record; and iv) continued growth potential.