PPHE has delivered a strong set of results for 2017. The 14% EBITDA gain was ahead of our expectations, largely owing to core resilience in London, the company's major profit source, despite a demanding H2 comparative and notable market slowdown. The new properties (Waterloo and Park Royal) also surprised. While 2018 is transitional as management reviews deployment of its greatly enhanced flexibility (c £290m cash equivalents at end-2017), there should still be good progress thanks to recent openings and current momentum. Indeed, our new 2019 forecasts may prove cautious, given such investment potential. PPHE’s modest rating reflects neither this excess liquidity nor its asset backing (fair value c £20/share).

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