HLT
Hilton Worldwide Holdings Inc
Consumer, Event Driven/Special Sit
10/24/2016
Presented
| Date | 10/19/2016 |
| Price | $48.30 |
| Market Cap | $22.79B |
| Ent Value | $31.66B |
| P/E Ratio | 13.94x |
| Book Value | $6.44 |
| Div Yield | 0.01% |
| Shares O/S | 231.23M |
| Ave Daily Vol | 1,556,627 |
| Short Int | 6.37% |
Current
| Price | $236.12 |
| Market Cap | $58.19B |
| Hilton Worldwide Holdings, Inc. operates as a holding company, which provides hospitality services through its subsidiaries. It is engaged in the owning, leasing, managing, developing, and franchising hotels, resorts, and timeshare properties. The company operates through three segments: Management and Franchise, Ownership, and Timeshare. The Management and Franchise segment manages hotels, resorts and timeshare properties owned by third parties and license its brands to franchisees. The Ownership segment consists of hotels that it owns or lease. The Timeshare segment markets and sells timeshare intervals, operates timeshare resorts and a timeshare membership club and provides consumer financing. Hilton Worldwide Holdings was founded on March 18, 2010 and is headquartered in McLean, VA. |
Please note: It was announced this morning, October 24, 2016, that China’s HNA Group is buying ~25% of Hilton Worldwide Holdings Inc. from Blackstone Group for about $6.5 billion (this values the company at $26.25/ share and cuts Blackstone’s stake to 21% from 45%).
Please note, Hilton (HLT) spun off 3 shares for every 10 and then effectuated a 1-for-3 reverse stock split following distribution effective 1/4/17. The presented data has been updated to account for the change, however, the text of the note may refer to data based on the original presented price of $23.00.
Publicly traded companies mentioned herein: Blackstone Group LP (BX), Hilton Worldwide Holdings Inc (HLT), Marriott International Inc (MAR)
Highlights
The presenter is long shares of Hilton Worldwide Holdings (HLT) at $23 ahead of the split of the business, which he expects to occur in late November/ early December 2016. With the stock trading in the low-$20s (11x EBITDA), the long-term risk/ reward is attractive and investors have a near-term, value-creating catalyst to look forward to. Collectively, he values the three businesses - Hilton Grand Vacations (the timeshares business), Park Hotels & Resorts (the REIT) and “New Hilton” (the management and franchise business) - based on what he believes to be reasonable multiples to EBITDA, and the fair value is $30 per share (30% upside). Longer-term, investors can choose if they would like to sell or maintain exposure to Hilton Grand Vacations and Park Hotels, which are the smaller pieces of the business. Timeshares is worth just $3 - $3.50/ share (based on an 8x - 8.5x EBITDA multiple), and the REIT should trade at 11x (in line with peers) and is worth ~$6; thus, investors can create New Hilton at a meaningful discount to its true value ($20, 14x EBITDA).
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