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Pizza Express: Sceptical on China Ebitda "Maturation" - Value Breaks in Senior Secured.

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    Company Profile

  • 64 Pages
  • June 2019
  • Region: China
  • Everest Research Group
  • ID: 5131094
Why Read?

  • Understand the economics of Pizza Express’ China business
  • Understand why EBITDA maturation in China is unlikely to occur
  • Understand where value breaks in the capital structure
  • Understand whether a spin-off or sale of the International / China business to Hony could clear a path to refinancing
  • Understand why a CVA modelled on recent CVAs of other UK chain restaurants still leaves even senior secured debt impaired
  • Understand why Pizza Express’ UK (& Ireland) EBITDA margin is likely to remain structurally higher than competitors

What’s New?

  • Analysis of Pizza Express’ China economics - revenue per restaurant relative to UK; revenue per new restaurant vs revenue per mature restaurant
  • Sensitivity analysis - what uplifts to LFL revenue growth and EBITDA margins (across UK & Ireland and International / China) are needed to cover Pizza Express’ senior secured debt; CVA scenario; International / China sale or spin-off scenario
  • Decomposition of Pizza Express’ UK & Ireland EBITDA margin decline since 2013

Questions Answered

  • Will Pizza Express’ EBITDA margin in International / China ever move materially higher?
  • What is Pizza Express worth and what valuation does this imply for the senior secured and senior notes?
  • Is Pizza Express experiencing downward pressure on its UK & Ireland EBITDA margin as a result of its higher price point on pizzas compared to competition?
  • How would a CVA impact Pizza Express’ value?
  • How much would Hony need to pay for the International / China business in order to give Pizza Express a realistic chance of refinancing ahead of its 2021 senior secured notes maturity?

Table of Contents

  • View, Variant Perception & Recommendations
  • Business Overview
  • Industry Overview
  • Regulation
  • M&A
  • Historic Financial Analysis
  • Group Structure & Capitalization
  • Trading Update – ER Q319
  • Base Case Forecasts
  • Bear Case Forecasts
  • Liquidity, Capital Markets & Restructuring
  • Investment Considerations

Companies Mentioned

  • Pizza Express
  • The Azurri Group
  • Prezzo
  • Pizza Hut
  • Franco Manca
  • Strada
  • Bella Italia
  • The Restaurant Group
  • Jamie’s Italian