(News Bulletin 247) – Stifel initiated its buying advice on the company on Monday, with a target price of 25 euros. The design office considers the file undervalued while Compagnie des Alpes should present better results than what the market anticipates.

Compagnie des Alpes is all schuss on the Paris Stock Exchange. The title of the operator of ski areas, which also manages theme parks such as Parc Astérix climbs 7.1%, to 14.82 euros Monday around 4:00 p.m.

The rise of the file is to the credit of Stifel, which initiated coverage of Compagnie des Alpes on Monday morning with a recommendation to buy, with a target price of 25 euros. This target set by the broker thus reveals a potential of 70%, taking into account the current progression of the title on the Paris Stock Exchange.

For Stifel, CDA is assimilated to a luxury group

In the eyes of Stifel, Compagnie des Alpes will “benefit[er] of a scarcity of snow” linked to global warming. This argument formulated by the design office seems counter-intuitive at first sight, for a ski resort operator.

In its note, the design office recalls the climatic challenge facing French ski resorts, since “over the past 20 years, 10% of French ski resorts have closed due to lack of snow at low altitude”. This phenomenon is expected to accelerate in the coming years due to global warming.

But for the design office, Compagnie des Alpes “has everything to gain”. The company operates “three of the largest, highest and most beautiful ski areas in the world” such as Val d’Isère/Tignes, Méribel/Les Ménuires or Les Arcs/La Plagne, which are located above 2000 meters above sea level. ‘altitude. An ideal situation which will guarantee Compagnie des Alpes the maintenance of a winter activity with an “ever larger influx of skiers in search of quality and reliable snow”, unlike competing resorts, located a little lower.

“With its emblematic ski resorts, Compagnie des Alpes can be assimilated to a luxury group, with a unique, rare and high quality ski offer which translates into strong pricing power (a company’s ability to set its prices without losing customers, Ed)”, praises Stifel.

The leisure parks division, which includes among others the Parc Astérix or the Futuroscope – two of the largest theme parks in France – is not left out. Thanks to an “active” investment strategy, this division is outperforming the European theme park market, insists Stifel. “The company regularly launches new major attractions, expands its parks and increases the average spending of its customers by developing its hotel offer”, adds the research department.

An “undervalued” title

Despite these strong points raised by Stifel, the Compagnie des Alpes share is excessively “undervalued compared to its competitors, but also in absolute terms”. The file is still trading at a “P / E (the price ratio compared to expected profits, editor’s note) less than 10x and with a discount of more than 50% compared to its main comparables”, underlines the research department.

According to the broker, the file is still penalized by market concerns about global warming and the economic slowdown, which is pushing investors “to underestimate the group’s performance and growth”.

But the design office is more optimistic for the future. Compagnie des Alpes should benefit from a strong revaluation on the stock market insofar as its profits are expected to exceed market expectations.

“In 2024, the company should see its margins recover, as it will continue to increase its prices and this time should benefit from a stabilization of its costs. With the continued growth of the group, we anticipate an increase in 17% of EPS (earnings per share) while the consensus predicts stability,” says Stifel.

For this year, the research department indicates that the company will suffer “a slight compression of its margin due to the increase in energy costs”. At the end of May, Compagnie des Alpes had already warned the market of this inflationary shock to its activity. For the period covering the months of October 2022 to March 2023, the company had to deal with an increase in electricity costs. The bill rose from 14 million euros in the first half of 2021-2022 to 34 million euros over the same period of the current financial year.

However, Compagnie des Alpes was able to negotiate this shock, and observed strong attendance at its ski resorts and leisure parks over the period covering the months of October 2022 to March 2023.

For the whole of the 2022-2023 financial year, Compagnie des Alpes still intends to achieve “increasing turnover on a like-for-like basis” and “a gross operating surplus (OMDA), excluding the integration of MMV (an alpine hotel operator bought last year) and non-recurring items, close to that of 2021-2022”.