NoHo Partners

NoHo Partners' Q1 2025 results missed Vara Research expectations on several items, but we argue that the seasonally small quarter should not be taken as a bellwether for the full year. Reservation levels ahead of the busy summer season are solid, and the company has seen some signs of improvement in the market. Moreover, NoHo has strengthened its presence in Denmark through the acquisition of Halifax Burgers, which we believe should support the existing Danish operations as well. With our virtually unchanged and positive expectations going forward, we derive a slightly higher fair value range of EUR 11.8-14.8 (11.4-14.5) per NoHo share by equally weighing our DCF- and multiples-based valuation methods. Marketing material commissioned by NoHo Partners.

NoHo Partners reported seasonally small Q1 EBIT of EUR 7.3m (up 6% y/y), 7% below Vara Research consensus and our estimate. Q1 net sales were also up 6% y/y to EUR 99.3m, 3% below consensus and 1% below our estimate. Operational EBITDA (operating cash flow) was EUR 9.7m (EUR 9.1m a year ago). We believe the EBIT miss was mainly attributable to the International operations, which fell 23% below our expectations. The main negative revenue deviation y/y came from Norway. The Finnish operations’ EBIT, on the other hand, beat our estimate by 3% despite the soft environment, and EBIT margin improved 0.7 pp y/y to 7.6%. Guidance for 2025 was reiterated: NoHo expects the EBIT margin of the Finnish operations to remain at the current good level (2024: 10.2%) and EPS to increase (2024: EUR 0.54; consensus: EUR 1.70). Mathematically, the Q1 EBIT miss translates into 1-2% negative consensus estimate revisions for 2025E-27E, but due to its small size, we do not expect Q1 to trigger any meaningful estimate revisions and expect NoHo to be well on track to deliver on its guidance for 2025.

NoHo Partners has acquired a 65% stake in the Danish restaurant chain Halifax Burgers. The founders will remain minority owners. Halifax Burgers is a high-quality sit-down burger concept, and it has 11 restaurants in Denmark. According to our understanding, the concept is very similar to Cocks & Cows, which NoHo already owns in Denmark (8 restaurants). In 2024, Halifax Burgers generated a revenue of EUR 14m, i.e., ~3% of the total group sales in 2024. We believe this is likely a good fit for Noho’s portfolio, and given NoHo’s experience, expertise and synergy benefits, the acquired operations are likely to contribute positively to the group earnings. Halifax will be reported as part of Noho as of 1 May, and assuming a EUR ~15m revenue in 2025E, this is likely to have a ~2% positive impact on Vara Research consensus revenue. NoHo Partners will report its Q1 tomorrow at 8:00 EET – we are roughly in line with consensus on the top-line and on EBIT, but we note that the consensus may still partially factor in Better Burger Society, which was separated from the group on 1 April.

NoHo Partners has executed on its strategy by separating its subcompany Better Burger Society (BBS) while retaining majority ownership and operational power. At first glance, we view the arrangement as positive, as it not only unlocks hidden value, but it should also improve NoHo's balance sheet in order to boost growth and enable it to conduct similar transactions in the future. For 2025, we believe NoHo will benefit from the gradually recovering Finnish economy, while BBS should accelerate its growth with 11 new restaurant openings. Going forward, we expect more BBS-like arrangements to unlock further shareholder value, and hence we continue to view the investment case as compelling, especially in the longer term. Marketing material commissioned by NoHo Partners.

NoHo Partners is separating its subgroup Better Burger Society from the group, while retaining a majority ownership in the company. We view this arrangement as being in line with NoHo’s current strategy, where it aims to create shareholder value through investment activities in the international markets. We believe that NoHo will remain as an active owner and continue to offer its operational expertise to BBS. NoHo will record a positive one-off impact of EUR ~20m on 2025 result (EUR ~1.0 per share). NoHo’s stake of BBS (50.7%) is currently valued at EUR ~45m, implying ~12x EV/EBIT based on 2024 numbers. In conjunction with the arrangement, NoHo revised its long-term revenue target for the Finnish operations to EUR 350m (previously EUR 400m) - in 2024, BBS generated EUR 31m revenue in Finland, while we have modelled EUR 330m for Finland in 2027E. Initially, we view this arrangement as positive, as it should improve NoHo’s balance sheet in order to boost growth and conduct similar transactions in the future, while we believe that NoHo could exit BBS completely at a later stage.

NoHo Partners' Q4 2024 results came in clearly above Vara Research consensus, as the company continued to benefit from its economies of scale in a softer market. For 2025, we believe NoHo will benefit from the Finnish market returning to its growth trend and that it will accelerate its investment activities in international markets. We argue that these value-creating activities, combined with above-market organic growth and acquisitions, will be the key drivers for the share going forward, while a solid dividend yield, at 6-7% for 2025E-27E, provides downside protection, in our view. Our fair value range of EUR 11.4-14.5 is unchanged, based on our equally weighted DCF- and multiples-based valuation methods. Marketing material commissioned by NoHo Partners.

NoHo Partners reported Q4 EBIT of EUR 15.1m (+42%% y/y), 19% above Vara Research consensus and 13% above our estimate. Q4 net sales were up 12% y/y at EUR 120.0m, fairly in line with consensus and our estimate. Operational EBITDA (operating cash flow) was EUR 17.8m in Q4 (EUR 13.5m a year ago), and the dividend proposal was EUR 0.46 per share, fairly in line with LSEG Data & Analytics consensus at EUR 0.47. Guidance for 2025 is now consistent with the financial targets for 2025-2027, and expects the EBIT margin of the Finnish operations to remain at the current good level (2024: 10.2%) and EPS to increase (2024: EUR 0.54; LSEG consensus: EUR 0.75). We view the guidance as reasonable, given the increased focus on international expansion through investment activities and thus on EPS. Mathematically, the Q4 EBIT beat translates into ~6% positive consensus estimate revisions for 2025E-26E.

Ahead of NoHo's Q4 2024 report, due out 12 February, we tweak our estimates. We expect the company to reach its guidance of EUR ~430m in net sales, with a ~9.5% EBIT margin, for 2024, as we argue that NoHo's performance is superior to the sluggish market growth witnessed throughout the year. For 2025, we expect a solid year, characterised by low-single-digit market growth and continued international expansion. With a positive outlook ahead, we derive a higher fair value range of EUR 11.4-14.4 (10.9-13.7) per NoHo share by equally weighting our DCF- and multiples-based valuation methods. Marketing material commissioned by NoHo Partners.

NoHo Partners' Q3 2024 results missed Vara Research expectations on several items, but the guidance for 2024 was reiterated. While the guidance places a lot of pressure on Q4 growth and earnings improvement, we view the solid pre-Christmas season reservation levels 10% ahead of last year as encouraging. In addition, the Finnish operations' Q3 profitability was above our expectation, despite a soft market. This was positive to us, and we argue that demand should improve during 2025. We derive a fair value range of EUR 10.9-13.7 (10.8-13.7) per NoHo share by equally weighting our DCF- and multiples-based valuation methods. Marketing material commissioned by NoHo Partners.

NoHo Partners reported Q3 EBIT of EUR 9.9m (+14% y/y), 5% below Vara Research consensus and 11% below our estimate. Q3 net sales were up 11% y/y at EUR 107m, but fell 3% below consensus and 5% below our estimate. We believe the miss was mainly attributable to the International operations, which fell 34% below our expectations on EBIT. We believe this was mainly due to the seasonally softer quarter in Switzerland. The Finnish operations’ EBIT beat our estimate by 8% despite the weak market. NoHo expects demand to recover during 2025 and notes a good number of event reservations for H2. Guidance for 2024 was reiterated: NoHo expects around EUR 430m sales and around 9.5% EBIT margin, implying a 15% sales growth y/y and slight pressure on EBIT. For Q4, the reiterated guidance indicates significant y/y improvement (+15% for sales and +35% for EBIT). However, we continue to view the guidance as challenging, and expect moderate revisions on 2024E consensus EBIT following the Q3 results.