DAVY VIEW

While these are early days in the execution of Hostelworld’s new group strategy, progress has begun and the implementation of the plan will be a key focus for the company in 2019 — with the ultimate objective being a return to growth in 2020. In the meantime, Hostelworld has delivered a modest (3%) beat on adjusted EBITDA in 2018 and it continues to demonstrate strong cash-generation capabilities. We believe current multiples (8x EV/EBITDA) fail to capture the company’s earnings potential in a growing space.