Davy Morning Equity Briefing
Jun 27, 2024
Flutter Entertainment
Focus on the bigger picture – growth and attractive valuation
The Flutter Entertainment investment case is continuing to improve as FanDuel has inflected from an attractive opportunity to an attractive business. Outside of the US, the UK & Ireland business has taken significant share and is well placed ahead of pending regulatory change, International is increasingly focused on consolidate and invest markets, and growth will reaccelerate post the lapping of India tax. Australian forecasts have been significantly rebased and Flutter retains its dominant position. Together, this indicates a group aEBITDA CAGR of 24% from FY23-FY26. We believe a valuation of 12.9x/10x EV/EBITDA FY25/FY26 is too low for this level of growth. The catalyst path begins to improve from here as indexation shifts from a negative to a potential positive, early Q2 US data look encouraging and focus will soon shift to the September 25th Capital Markets Day.
Saint-Gobain Group
Acquisition of FOSROC for $1.025bn
Following the announcements of CSR (€1.9bn) and Bailey (€600m) in February and April of this year, Saint-Gobain continues to deploy capital at a solid pace and with strategic consistency. The acquisition of FOSROC adds scale, geographic diversity and more growth potential for Saint-Gobain’s construction chemicals business.
Dalata Hotel Group
Good momentum into the summer
Dalata has updated on H1 trading this morning, noting that the trading environment has improved as it has entered the busier part of the year. Group like-for-like (LFL) RevPAR has improved from -4% in January to April to -1% for H1, driven by good growth of 3% in the last two months of the period. EBITDA is expected to be >€105m for the half, a little behind our forecasts given the RevPAR trajectory up to the end of April. However, the momentum in the busy part of the year is encouraging and management is positive in its outlook for the summer period. Despite a softer H1 than we anticipated, we are unlikely to make any meaningful change to our full year EBITDA forecasts owing to positive recent momentum. In the context of the recent share price weakness and attractive valuation, this is a positive update.
Harworth Group
Significant sale at Skelton Grange to drive material NDV uplift
Harworth’s land sale will act as a meaningful contributor to EPRA NDV in 2024. Alongside this, the updated investment portfolio strategy, which looks beyond 2027 for the first time, highlights the strong growth trajectory of the group and will underscore a growing EPRA NDV in future years. We believe that the announcement today should play into a re-rating story.
