Global food and drinks concessions operator SSP (SSPG) rises 4.6% to 256.2p, as maiden annual numbers reveal a pre-tax profits beat. The Upper Crust-to-Caffe Ritazza brand owner, which operates coffee shops, convenience stores and takeaway restaurants at airports and train stations around the world, also flags strong cash flow and falling net debt, providing capacity for continued growth.
Floated on the Main Market in July at 210p, SSP is in demand as it reports 14% growth in pre-tax profits to a better-than-expected £71.5 million for the year ended 30 September, ahead of Numis Securities' £68.9 million forecast and the £68.1 million consensus of analysts' estimates.
On constant currency sales are up 4% to approaching £1.83 billion. Like-for-like sales grew 3.3%, driven by the UK, North America and Asia Pacific and aided by rising passenger volumes and price increases.
Chief executive officer Kate Swann, the former WH Smith (SMWH) boss, highlights new contracts secured at Beijing, Dubai, Sacramento and Stansted airports for the running Shares Play of the Week, with strong cash generation and a strengthening of the balance sheet 'providing capacity for continued growth.'
The respected retailer says SSP has 'started the financial year in line with our expectations and looking ahead, whilst a degree of uncertainty always exists around passenger numbers in the short-term, we are well positioned to benefit from the underlying positive trends in our markets.'
As Shares recently outlined, the FTSE 250 company offers a compelling play on structural growth drivers including burgeoning air and rail traffic across the world, boosted by growing affluence in developing and emerging markets. Increasing spend per passenger in travel hubs, as well as the trend for airport and railway station operators to invest in infrastructure, the commercialisation of their sites, not to mention the rise of low-cost carriers, all augur well for SSP.
Sticking with his forecasts, 'add' rating and 300p price target, Numis analyst Douglas Jack argues: 'SSP is highly operationally geared into growing markets, with plenty of self-help opportunity to grow margin. Although the valuation may appear high, so too is the growth and upgrade potential.'
