Davy Morning Equity Briefing
Jan 14, 2025
Irish banks
Avant full bank plans proceeding
Bankinter continues to proceed with its plans to transform Avant Money into a branch. The rebranding to Bankinter is new but not surprising. We understand a digital platform is currently being built with a deposit offering scheduled to be the first launched. Avant is already competitive in the mortgage and personal lending markets and will add some competition in deposits.
Grafton Group
No change to forecasts expected after in line trading update
Grafton’s trading update has indicated that adjusted operating profit for 2024 will be in line with expectations. Accordingly, we do not expect to make changes to our estimates. Last year presented its challenges as many of Grafton’s end-markets were persistently weak, although a clear highlight was the platform acquisition of Salvador Escoda. As we noted previously, the deal augmented the group’s existing portfolio and also provides a platform for further expansion in a fragmented market with attractive growth potential. Like its peers, the Grafton equity has had a poor start to the year (down 12%); at a 2025 P/E of just 12x based on our estimates, the stock looks oversold.
Persimmon plc
FY24 ahead of guidance
FY24 is ahead of consensus expectations by up to a mid-single-digit quantum, driven mainly by a better average selling price outturn. Outlook comments are, as may have been expected, somewhat downbeat.
Cairn Homes
A good year of growth confirmed for 2024
2024 has delivered significant growth in activity at Cairn Homes and, on a bottom line basis, the full year results will be marginally ahead of our expectations. FY25 will see further growth in revenue (>10% guided). We currently expect only modest changes to our forecasts.
Hostelworld
Strong EBITDA growth and good prospects
Hostelworld issued a FY24 trading update this morning. As had been flagged through the year, there was pressure on booking values owing to a mix shift to lower cost destinations, which contributed to a small year-on-year (yoy) decline in revenue (-1%), in line with our expectations. Importantly however, the company successfully executed on its social strategy during 2024, which drove an impressive margin performance and aEBITDA of €21.8m was ahead of our €21.4m. We expect the revenue mix to normalise in 2025 and the statement flags some encouraging rays of light in this regard. We believe the Hostelworld investment case is attractive given the combination of: revenue growth; margin expansion owing to continued execution of its social strategy; and its strong balance sheet position.
