Buy Signal on Melia Hotels International (MEL-ES)

Our system triggered an Enter Long Strategic signal on April 20, 2022 on MEL-ES, Melia, the Spanish resort company. Our system also triggered an Enter Long tactical signal on April 15, 2022 that suggest a bullish acceleration

Melia is € 1.5 Bn market cap and the leading hotel operator in Spain. Revenues are mainly achieved via hotel operation (89%): Meliá Hotels & Resorts, Tryp Hotels, Sol Hotels, Paradisus Resorts brands; sale of weeks in tourist complexes (6%); and the development, sale and management of real estate assets (5%). Spain represent 51% of sales, Europe-Middle East-Africa 19%, and America 30%.

Melia is expected to strongly recover in 2022, with sales reaching € 1.4 Bn and a return to operating profit at €55M, corresponding to a 4% EBIT margin. The company is expected to fully recover its 2019 pre-covid activity level in 2023, with a € 1.8 Bn revenue and double digit margin. The net debt is expected to stabilize à € 2.7 Bn and to steadily decrease from 2023.

The dividend was cut in 2020 and is expected to resume in 2023.

Short term catalyst: Reopening, strong bounce in airline traffic .

This signal is consistent with the strong recovery in airlines traffic in Q1-2022.