Pizza Express Memo 210619
- 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
- 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
- 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?
- View, Variant Perception & Recommendation
- Business Overview
- Financial Projections, Valuation & Sensitivity Analysis
- Group Structure, Capitalisation & Bond Terms
The Azurri Group
The Restaurant Group