298p

Loss to date: 1.7%

A lack of news on sale and leaseback plans has seen PPHE Hotel (PPH) drift downwards over the past few months. We see plenty of reasons to stay positive. Long-term banking facilities were refinanced in December. PPHE has secured planning permission for a 98-room extension at its Park Plaza Riverbank hotel in London.

A trading update last week (23 Jan) shows a robust London performance in the fourth quarter. Edison notes that 2013 profits could beat its expectations given provisional guidance of 2% revenue gain versus its forecast of a 1% decline for the year. It comments: ‘Recent re-financing should improve sentiment and allow a step-up in investment, thereby accentuating substantial hidden value (c 45% discount to reported net asset value).’

The latter point is central to our bullish stance on the stock. We highlighted the hidden wealth in PPHE last summer (see Plays, Shares 29 Aug ‘13) where its hotel assets are on the books at a significant discount to their likely ‘true’ market value. The hotelier wants to sell at least one of these assets, albeit still maintain operational control.

Have patience; stick with PPHE. (DC)