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Nordic Camping CEO says Migrationsverket business is good

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As we have mentioned several times before, Nordic Camping is a big winner of the current asylum wave in Sweden. The leading Swedish camping operator has a contract for seven of its 14 camping sites during its off-season months. Given the increasingly high stream of new refugees coming into the country, we would not be surprised of the current contract was to be expanded. Nordic Camping greatly benefits from this kind of business, since the winter months usually mean mainly costs for the company.

Swedish news agency Direkt talked to Nordic Camping CEO’s Tom Sibirzeff to discuss the matter. Mr Sibirzeff says: “We are not looking into buying other sites just for the refugee business. There are other players out there who are interested in that.” He highlights that the core business of his company is tourism and that no asylum seekers are on any of their camping sites before the camping season is officially over.

Mr Sibirzeff is also quoted saying that the increased inflow of asylum seekers will not lead to increased prices, at least not short-term. The reason is that Nordic Camping has a standing agreement with Swedish Migrationsverket where the price levels are set.

Says Mr Sibirzeff: “We see an increased inflow of asylum seeks but that has not affected the lengths of the agreement, it is rather short agreements which stretch until the beginning of next year. In previous years those agreements have been extended for as long as we wanted to – we have some camping sites we want to have up and running for our tourists in the middle of April, others later.

The company announced on September 17th, that they have signed an agreement for seven camping sites and that the order value for those was estimated to be around SEK 7m until the year-end. We believe that this value was estimated using an average occupancy rate of around 50%. Given the large inflow of asylum seekers to Sweden, this should easily be exceeded and we will be very interested to high the company’s comments regarding this in the upcoming Q3 2015 report on November 12th.

In his interview with Direkt, Mr Sibirzeff is stated saying that the agreement with Migrationsverket contributes positive to the company’s operations, because it is smoothing out the seasonal pattern where the third quarter is usually strongest. “Yes, we are certainly not denying that fact. We want to have traffic all-year around, which is why we start camping sites close to big cities. If the agreement with Migrationsverket was to stop one day, we have other interested parties such has construction companies etc. This is part of our business plan.

According to Mr Sibirzeff, Nordic Camping has started Swedish classes for this migrants who arrive at their sites. “This is very valuable, even if we do not earn money on that.”

Besides the ongoing asylum wave to Sweden, we see several other triggers for Nordic Camping going forward:

  • The most important one being continued M&A activity. Nordic Camping has consolidating the Swedish camping industry for many years and there remains a lot to be down. We believe that Nordic Camping currently has a market share of around 15%, and is one of the biggest operators. With a recent capital injection in May this year, the balance sheet is strong and we are eagerly awaiting any news what the company intends to do with the money.
  • Elsewhere, there is big potential in investments in cottages on Nordic Camping sites, e.g. at the recently acquired Halmstad camping ground, which has the potential to double in size, as well as the building permit for 45 cottages.
  • There is also underlying growth for the camping industry in general.
  • Last but not least, we also expect the company to realise its hidden value as real estate assets are currently booked at purchase cost value (i.e. large revaluation potential once IFRS accounting standards will be applied).

Nordic Investor

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