NoHo Partners

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.

Ahead of its Q3 2024 report, we take a slightly more cautious view towards NoHo Partners' revenue development, given the prevailing market softness in the Nordics. While we expect NoHo's International business to continue its solid growth, and even though we incorporate the newest acquisition in Finland into our estimates, we regard NoHo's current 2024 guidance for EUR ~430m in sales and around a 9.5% EBIT margin as being at risk. However, we note that Q4 accounts for ~30% of annual earnings, and thus could swing estimates both ways. By incorporating slightly higher valuation multiples, we derive an increased DCF- and multiples-based fair value range of EUR 10.8-13.7 (10.1-12.9) per NoHo share. Marketing material commissioned by NoHo Partners.

NoHo Partners has acquired H5 Ravintolat Oy, which owns eight restaurants in Tampere. The portfolio includes one night club, one lounge bar, pubs and the restaurant operations of the brand new Tammela football stadium. The acquisition was made through stock transaction, and while the transaction price was not disclosed, we believe it has been moderate given the current weak market environment and based on NoHo’s earlier transactions (~4-5x EV/EBITDA). The previous owners will retain minority ownership and operational role in the business, and based on NoHo’s earlier transactions, we believe NoHo’s ownership could be between 60-80% of the total entity. In 2023, H5 Ravintolat generated net sales of EUR 8.5m with an EBIT margin of 13%, which is very good for a portfolio of restaurants, in our view. It’s net sales CAGR in 2019-23 was 58%, while EBIT CAGR was 64%. Hence, while being relatively small in size (~2% of NoHo’s 2025E revenue and ~2.5% of 2025E EBIT assuming the 13% margin) we believe that the acquired businesses will contribute positively in NoHo’s profitability going forward. We also view the restaurant operations of the Tammela stadium as particularly interesting, as it adds to NoHo’s portfolio of event venues (NoHo already operates the Nokia Arena in Tampere).

NoHo Partners' Q2 2024 results missed the Vara Research consensus' high expectations, but we nevertheless argue that the results were solid considering the challenging market. The Finnish market was soft, but International operations beat our expectations, and we anticipate a gradual pickup in Finland during H2. NoHo Partners reiterated its 2024 guidance of roughly EUR 430m in sales with an EBIT margin of around 9.5%, and its good reservation levels are cautiously positive ahead of the holiday season in Q4. We derive a fair value range of EUR 10.1-12.9 (10.7-13.6) per share. Marketing material commissioned by NoHo Partners.