Do Not Disturb (For Now): Resume at Equal-weight

Research evidence excerpt

Do Not Disturb (For Now): Resume at Equal-weight

t 12 months (10% of market cap), putting it on DPS (€) 1.35 1.44 1.59 1.75

Div yld (%) 2.8 3.1 3.4 3.8

track to exceed its €3bn 2023-27 cash return target. (3) It is also exploring a FCF yld ratio (%)** 5.5 6.6 7.8 9.0

potential listing of its lifestyle division Ennismore, which could add value if awarded Net debt (€mn)* 4,089 3,519 4,010 4,036

Net debt/EBITDA** 3.4 2.8 2.9 2.7

a high multiple. (4) The company is based in relatively attractive geographies with a RNOA (%)** 8.1 9.1 11.2 12.6

ROE (%)** 11.5 16.7 20.2 28.0

low branded penetration of hotels, positioning it well to take share. (5) Accor's

pipeline is skewed to the high RevPAR luxury & lifestyle segment, which should Unlessframeworkotherwise noted, all metrics are based on Morgan Stanley ModelWare

provide a revenue mix tailwind as these hotels open. (6) It is generally executing ***==GAAPBasedoronapproximatedconsensus methodologybased on GAAP

well, beating EBITDA guidance for 3 years running and returning cash generously. e = Morgan Stanley Research estimates

(7) Valuation looks cheap, at 16x P/E and 11x EBITDA for 2027e, ~25% below asset-

light peers.

Negatives: (1) Accor still has more operating leverage than peers (20% of EBITDA

from leases and "SMDL", and one-third of M&F revenue from incentive fees). (2) Its

Middle East exposure (~10% of sales, 2x global peers), and low US exposure means

its RevPAR is no longer outperforming (Q2e RevPAR 0%). (3) Its net unit growth

Morgan Stanley does and seeks to do business with

(3.5-4%) is lagging most global peers (particularly in its Premium, Midscale & companies covered in Morgan Stanley Research. As a result,

investors should be aware that the firm may have a conflict of

Economy segment and in Europe).