“Notwithstanding the distressed economic environment and weaker fundamentals, Hili Group still forecasts healthy profitability margins for FY20, with an EBITDA margin of 12.3% (FY19: 13.2%). In view of this, the Group expects a positive interest coverage of 4.0x (FY19: 4.1x), with a leverage ratio of 6.6x.

We believe that Premier Capital remains a core operation for the Group. The latter’s reliance on Premier might pose risks for the Group, however we view that the strong franchise and regional operations are Premier’s key success in translating better margins within the restaurant segment. That said, we also acknowledge the fact that over the years management has pursued a strategy in sector diversification. Overall, we believe that the Group is well-positioned despite setbacks brought about by Covid-19. Based on this, combined with the Group’s strong credit metrics and a substantial cash position of €66.2m as at FY19, justify a Positive credit opinion on HLF.

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