Swedish camping operator Nordic Camping announced a strong set of Q1 2015 numbers, considering the seasonal pattern of the business. Total revenues of SEK 11,8m grew 11% versus Q1 2014. The first quarter is traditionally a very weak quarter for the camping industry, with relatively low revenues, fixed costs and investments in current and new grounds affect the result negatively.
Nordic Camping states that it is happy about Q1 2015 which was supported by a mild winter. The cooperation with the Swedish migration office at six out of its 14 camping grounds continues to develop well and the utilisation rate is at a comfortable levels until the start of the regular summer season starting in June.
We find it very positive that Nordic Camping states in the its report that the pronounced trend of increasing pre-bookings continues. At the end of April, around 25% of Nordic Camping’s capacity was pre-booked, which is a clear increase compared to last year. The value of all pre-bookings combined at the end of March was SEK 8,5m. Nordic Camping says that the general trend is enforced by its chain concept with a user-friendly and multilingual website for online-booking, which is also mobile friendly, a common booking central and not the least satisfied guests.
Another positive during the quarter was the change of bank and consequent renegotiation of loans which is improving the financial net going forward.
Commenting on its new grounds (Stensö Camping and Halmstad Camping), management states that it sees good growth potential. Stensö is an important addition to the company’s offering in South East Sweden, where Nordic Camping has not been present before. It is the company’s intention to build semester cottages there. In Halmstad, it was recently decided that the amount of camping slots can be doubled and 45 new cottages can be build.
As we have written about before, the Swedish industry organ SCR recently published a new record number for guest nights on Swedish camping grounds. Norwegian and Dutch guests account for the majority of foreign customers. Nordic Camping says that it is actively working towards foreign tourist, in cooperation with foreign travel agencies. The company is also investing in more slots for mobile homes, which enjoy strong growth.
In our opinion, investors interested in a rather non-cyclical growth story with real estate assets currently booked at purchase cost value (i.e. large revaluation potential once IFRS accounting standards will be applied) and significant consolidation potential in the industry, should have a close look at Nordic Camping. Being a leader in its market, the company seems well-positioned to continue its growth track. Currently trading at a 2015 PE-ratio of around 15x (according to our estimates), Nordic Camping appeals as an attractive buy candidate with limited risk involved.