NoHo Partners

Q2 EBIT beat Refinitiv consensus by 18%, underlining the improved operational efficiency of the company. Demand has remained favourable in early Q3 and bookings for Q4 suggest a solid end to the year. Guidance was kept intact and we consider another guidance upgrade possible in late 2022. Debt is expected to reach the targeted level in 2022 and the company can then conduct more meaningful acquisitions in 2023 to reach its 2024 top-line target of EUR 400m. Consumer confidence is low and uncertainty is relatively high ahead of an important Q4. We do not expect any meaningful direct impact from inflation. We derive a fair value range of EUR 9.9-12.1 (9.8-12.1) per NoHo share. Marketing material commissioned by NoHo Partners.

NoHo Partners reported Q2 EBIT of EUR 16.1m, +18% versus Refinitiv consensus and +2% versus Nordea. Q2 net sales were EUR 90.2m and came in line with consensus and Nordea. Operational EBITDA (operating cash flow) was EUR +18.3m in Q2, while cash position was EUR 3.5m at the end of Q2 (EUR 2.1m at the end of Q1). Government grants were EUR 4.8m in Q2 while we had anticipated EUR 4.3m. The company does not anymore disclose monthly sales figures, while the guidance for 2022 (upgraded on 22 June) was kept intact. The company is expecting around EUR 300m top line and above 8% EBIT margin in restaurant business. Refinitiv consensus has expected EUR 305m sales and 8.9% EBIT margin in 2022. According to the company, the booking situation for Q4 looks good, especially as weekends are concerned. The company has been able to mitigate inflation impact through purchasing agreements, price increases, and recruitment and resource allocation. Overall, the company expects good restaurant demand to continue in H2. Long-term targets are kept intact and the company targets EUR 400m sales and EUR 40m EBIT in 2024. We expect consensus to make slightly positive EBIT revisions.

NoHo upgraded its guidance on 22 June due to strong demand in the spring and early summer, as well as governmental compensation decisions. We believe demand has remained strong during the summer, but uncertainties over the important high season have increased owing to high inflation and low consumer confidence. Government grants will have a significant positive impact on Q2, and we expect a solid H2 given pent-up demand. Given the mix, we see potential for a further guidance upgrade, although this is unlikely to materialise before Q4, we believe. We derive a fair value range of EUR 9.8-12.1 (10.0-12.4) per NoHo share. Marketing material commissioned by NoHo Partners.

NoHo increases its guidance for EBIT margin of the restaurant business in 2022. The company now expect EBIT margin to exceed 8% (earlier: around 7%), supported by better-than-anticipated earnings development in the spring and early summer and compensation decisions confirmed by Finnish, Norwegian and Danish governments for H1. Top line guidance remains intact at around EUR 300m. Post-Q1 Infront consensus has been anticipating EUR 301m sales and 7.5% EBIT margin for 2022E and hence we expect around 6-8% positive consensus revisions. We have been in line with consensus on top line for 2022E, while we have been 5% ahead on EBIT. NoHo will release sales figures for June on week 28 and Q2 report on 9 August.

NoHo Partners reported strong May with above EUR 33m sales and above EUR 5.5m operational EBITDA. The company earlier guided for EUR 29-32m sales and 4.5-5.5m operational EBITDA in May. Sales were up 52% compared to May 2019. Normal operations operational EBITDA was EUR 4.5m, while Ice Hockey World Championships boosted top line by EUR 5.7m (Nokia Arena in Tampere). May was third consecutive month with around 15% operational EBITDA margin. The company maintained its June guidance intact and expects sales of EUR 27-30m and operational EBITDA of EUR 3.5-4.5m. In addition to robust Q2 expectations, the company expects fairly positive outlook for the rest of the summer season due to strong potential of entertainment venues. June sales guidance mid-point indicates some 3% upside to consensus Q2 top line (post-Q1 Infront consensus at EUR 88m) and ~1% for 2022E (EUR 301m). We have anticipated EUR 12.8m operational EBITDA in Q2 (no consensus), while the company guidance mid-point for June indicates some EUR 14m operational EBITDA for Q2. We have a fair value range of EUR 10.0-12.4 per NoHo share.

On Friday 13 May, NoHo Partners announced that the management and domestic investors have acquired the majority of the EUR 10m convertible capital loan granted to the company by Finnish Industry investment and converted their purchase into new shares in the company. The company repaid the remaining portion of the loan principal and interest, approximately one sixth, to Tesi using its cash assets. The company’s equity is strengthening and its net debt decreases by more than EUR 10m following the transactions. Subscription price of shares was EUR 8.03 and the company will issue a total of 1.27m new shares. We view conversion positively as it will increase low equity ratio. In Q1, equity ratio was 14.4% and we calculate around 17% equity ratio after subscriptions. In addition, arrangement releases future cash flow to growth investments, although we believe the company will concentrate on lowering its net debt level in 2022. We have a fair value range of EUR 10.0-12.4 per NoHo share

NoHo Partners' Q1 2022 results came in above Infront consensus expectations and it issued new guidance for 2022. Given the accelerating market, the company expects around EUR 300m in sales and ~7% EBIT margin for its restaurant business in 2022. We believe the mix will support Q2 earnings, while H2's outlook could be somewhat dented by rising inflation burdening consumers' disposable income. We believe NoHo might even increase its guidance at a later stage if spending remains solid in H2. Near-term focus will be on lowering its debt level, while more aggressive growth investments should drive top-line growth in 2023-24. We derive a fair value range of EUR 10.0-12.4 (10.3-12.7) per NoHo share. Marketing material commissioned by NoHo Partners.

NoHo Partners will report its Q1 results on 10 May. The restaurant market has witnessed a fast recovery after restrictions were lifted across operating markets. We believe NoHo will get a further boost to its Q2 sales from the Ice Hockey World Championships that will be held in Finland. The company expects business spending to gradually normalise, which we believe will have a positive impact on H2 sales despite uncertainties related to inflation, and to consumer confidence and spending. Owing to positive cash flow trends and the possible divestment of a 20.5% stake in Eezy, the debt level should decrease, lowering the risk level in the company. We derive a fair value range of EUR 10.3-12.7 (EUR 9.9-12.2) per NoHo share. Marketing material commissioned by NoHo Partners.

NoHo released strong March sales figures with around EUR 26m sales (guided to be over EUR 23m), up 25% from March 2019. March operating cash flow was around EUR 3.5m. The company expects EUR 28m sales and more than EUR 4m positive operating cash flow in April. Q1 sales were around EUR 48m (Refinitiv consensus EUR 42m, although not fully reflecting positive February), down around 4% from Q1 2019. March sales came above NoHo’s expectations, especially due to strategic growth areas in Norway, and Nokia Arena and Friends & Brgrs openings. The company expects the corporate sales to gradually recover in Q2. We note that ice hockey World Championships are held in Finland in Q2, which should boost sales clearly. We view March sales clearly positive for NoHo and note that given stronger-than-anticipated Q1, our Q2 estimates look conservatives (down 5% from Q2 2019). We have a fair value range of EUR 9.9-12.2 per share.

NoHo Partners’ February sales were over EUR 15m (earlier guided to be EUR 13-15m) while we had anticipated EUR 13m. Operating cash flow turned positive in February, while we had anticipated EUR 1m negative operating cash flow. The company expects sales to be over EUR 23m and operating cash flow to exceed EUR 3m in March (earlier over EUR 21m sales and EUR 2-3m operating cash flow). We have anticipated EUR 22m sales in March and EUR 3.5m positive operating cash flow. Hence, mathematically, there is some 10% upside to our Q1 top line estimate. According to the company, customer demand has recovered even faster than the company has anticipated. Entertainment venues and nightclubs have seen high demand during first weekend of March and the company has strong booking situation in its restaurants. We view February sales figures and March indications positive for NoHo and note that our H1 estimates look conservative based on the recovery pace in the market. The company will report March development during week 15. We have a fair value range of EUR 9.9-12.2 per NoHo share.