Jefferies upgrades PPHE, cites ‘valuation disconnect’

"We see a disconnect between PPHE's share price and fundamental performance," the bank said.

It noted that despite improved growth prospects, the shares are down 6% in the past three months versus the wider sector up 15% to 23%.

"We see declining leverage and the new investment fund as key catalysts for the discount to NRV at -55% (versus Dalata -35%) to narrow," it said.

Jefferies said the share price decline was unjustified, noting that PPHE has seen continued demand strength in January and February, forward bookings growth for 2023, and pricing on the books up 5% versus the final quarter of last year. It also pointed out that guidance for sales and EBITDA growth is in line with peers.

In addition, the bank said it sees greater scope for recovery in 2023 versus peers given that PPHE's prime city centre locations are well-positioned to capture the recovery and that its partnership with Jin Jiang gives it unique access to the Chinese consumer, with its 150m loyalty member base.

At 1435 GMT, the shares were up 6% at 1,230p.