Scandic is the Nordic region's #1 hotel operator — 320+ hotels, 68,000 rooms, 150+ destinations, six decades of heritage and the Scandic Friends loyalty base — running a predominantly leased mid-market estate (246 of 323 hotels leased). The franchise is genuine, but the economics are a lease-model operator's: capitalizing the ~SEK 44bn of hotel-lease liabilities into invested capital (the correct treatment — the leased estate IS the operating asset base) collapses adjusted ROIC to 4.5% against an 8% WACC.
The result is deeply and structurally negative economic profit: adjusted NOPAT 2,183 less a 3,888 capital charge = EP -1,705. This is not a one-off — the leased estate does not earn its cost of capital. Scandic's own pre-IFRS16 'adjusted EBITDA' (2,425) flatters returns by stripping out both the depreciation of, and the capital committed to, that estate.
This is normalized recovery, not a cycle peak: 2025 occupancy 64.1% is still below the pre-COVID ~66-68%, yet FY2025 operating profit FELL to 2,661 (from 2,836) and adj. EBITDA to 2,425 (from 2,495) despite a +24% larger room base — profitability is softening on expansion. The pending debt-funded acquisition of Dalata (56 hotels, currently only under a temporary management agreement) will add a further material lease/net-debt step-up on completion.
On the economically correct enterprise value (equity 19.5bn + non-lease net debt 0.5bn + ~44bn leases = ~64bn), Scandic trades at ~29x adjusted NOPAT and ~30x LTM earnings — rich for a sub-WACC operator with falling absolute profits. The one supportive metric is a 5.7% LTM FCF yield on market cap; the mttssn frame (EP, ROIC-WACC) says value is being consumed, not created.
Base SEK 84 (-7%): normalized recovery holds but the rich earnings multiple and pending leveraging deal cap re-rating. Bull SEK 112: occupancy returns to pre-COVID 66-68%, RevPAR expands and Dalata proves accretive. Bear SEK 60: a RevPAR down-cycle plus a debt-heavy, dilutive Dalata integration.
The market pays today’s enterprise value for roughly 0.9% NOPAT growth over 5 years. The business earns 4% on capital against a 8% cost of capital (spread -3.5 pp); the no-growth value is SEK 95/share (105% of price), so the rest is priced-in growth.
| Scenario | 24m target | Impl. g | Upside | Prob. | Driver |
|---|---|---|---|---|---|
| Bull | SEK 112 | ≥-50% | +23% | 25% | Dalata accretive + occupancy back to pre-COVID 66-68%, RevPAR expands |
| Base | SEK 84 | +2% | -7% | 50% | Normalized recovery holds; rich multiple + leveraging deal cap re-rating |
| Bear | SEK 60 | ≥5% | -34% | 25% | RevPAR down-cycle + debt-heavy Dalata integration bites |
| Prob-weighted | SEK 85 | — | -6% | 100% | Scenario-weighted expected value |
| WACC \ g | 0% | 3% | 5% | 8% | 10% | 15% |
|---|---|---|---|---|---|---|
| 6.50% | 124 | 110 | 99 | 80 | 64 | 16 |
| 7.25% | 107 | 92 | 80 | 58 | 41 | -12 |
| 8.00% (base) | 95 | 78 | 65 | 42 | 24 | -32 |
| 8.75% | 86 | 68 | 54 | 30 | 11 | -46 |
| 9.50% | 78 | 60 | 46 | 21 | 2 | -56 |
Green = fair value above the current price of SEK 90.70. The reverse-DCF conclusion is dominated by WACC and growth — see the whole surface, not a single fair value.
⤓ Download the full model (.xlsx) — formula-driven sheets; flex the blue input cells and the model cascades in Excel.
68k rooms across 150+ destinations plus Scandic Friends — the leading Nordic mid-market franchise.
64.1% still below pre-COVID 66-68% — upside if leisure/business demand normalizes.
LTM FCF 1,122 (5.7% yield) despite the heavy lease base — real cash conversion.
56 Irish/UK hotels (Clayton/Maldron) could be accretive if integrated at the right price.
Interest-bearing net debt only SEK 510m (0.2x EBITDA) ahead of the deal.
A quality Nordic hotel franchise in normalized recovery, but structurally value-destructive on the correct lease-capitalized frame (ROIC 4.5% < 8% WACC, EP -1.7bn) and richly priced at ~30x earnings — with a debt-funded Dalata deal adding leverage and integration risk. No margin of safety.
HOLD, medium conviction; base SEK 84 (-7%). The 5.7% FCF yield and franchise quality argue against an outright exit, but positive economic profit is the missing ingredient.
Every adjustment traces to the cited note/page in the source filing — click to open it there. Annual report / 10-K: 📄 open · Latest interim: 📄 open
| Adjustment / figure | Value | Source | Why mttssn treats it this way |
|---|---|---|---|
| LTM revenue 22,432 | 22,432 | Consolidated income statement, Apr-Mar 25/26 column / p18 📄 p.18 | Rolling-12-month revenue taken directly from the interim's own LTM column (FY2025 22,289 - Q1 2025 4,546 + Q1 2026 4,689). |
| LTM operating profit (EBIT) 2,680 | 2,680 | Consolidated income statement, Apr-Mar 25/26 / p18 📄 p.18 | Reported LTM operating profit; already includes full IFRS 16 depreciation AND the 102m ROU impairment, so it is the correct EBIT base for a lease operator (we add the impairment back post-tax separately). |
| FY2025 operating profit fell to 2,661 from 2,836 | 2,661 | Consolidated income statement / p115 📄 p.115 | Absolute earnings decline on a +24% larger room base evidences normalized-recovery, not cycle-peak - basis for retaining the LTM headline. |
| ROU impairment 102 inside D&A&I line | 102 | Note 13 depreciation/impairment table + narrative / p132 (also p5, p115 D&A&I line -3,996) 📄 p.132 | IAS 36 impairment of right-of-use assets, mainly Finnish lease contracts; sits inside reported EBIT so it is added back post-tax (ROU is a PPE-like operating asset). LTM = 102 (year-end event; no Q1 impairment). |
| Items affecting comparability add-back 53 (LTM) | 53 | Note 07 (FY p130) + Q1 CEO/IS reconciliation / p9 📄 p.9 | IAC = transaction/integration/restructuring not part of normal operations. LTM = FY 51 + Q1'26 2 - Q1'25 0 = 53 (corrects the streamlined 47). |
| Revenue by agreement type - 99.6% lease | 22,189 | Note 02 Net sales by type of agreement / p126 📄 p.126 | Lease-agreement (owned-operated) revenue 22,189 of 22,289; management fees only 44, franchise 25, owned 26 - an owned-lease operating model, not an asset-light fee model, which is why leases dominate IC. |
| No trademark PPA amortization | 0 | Note 12 Intangible assets / p131 📄 p.131 | Scandic brand trademark (2,782, all in Sweden) has indefinite useful life and is not amortized - no PPA charge to reject; only IT-intangible amortization (-68) which stays in opex. |
| No goodwill/trademark impairment FY2025; impairment-test WACC 12.1-13.8% | 0 | Note 12 impairment testing / p131 📄 p.131 | Year-end test showed no goodwill/trademark losses for any CGU (Sweden/Norway/Finland/Other Europe); disclosed pre-tax WACC 12.1-13.8% and 2% terminal growth recorded but NOT used as our 8% capital charge. |
| Lease liabilities 44,068 (Q1 2026) | 44,068 | Balance sheet incl/excl IFRS 16 reconciliation / p32 (FY Note 20 p116: 43,692) 📄 p.32 | Non-current 41,146 + current 2,922, read from the IFRS16 'Effect' column. Capitalized into IC because leased hotels (ROU ~75% of total assets) are the primary operating asset. |
| ROU assets ~39,829 = ~75% of total assets | 39,829 | Balance sheet incl/excl IFRS 16 reconciliation / p32 📄 p.32 | IFRS16 'Effect' on total non-current assets. ROU >> 50% of operating assets -> lease_liabilities_in_ic = true decision rule. |
| Interest-bearing debt (credit institutions) 987 | 987 | Financial position / net-debt commentary p10 (BS p19) 📄 p.10 | Non-lease financial debt; added to IC alongside capitalized leases. Interest-bearing NET debt only 510m (0.2x adj EBITDA). |
| Total equity 2,757 / NCI 77 / OCI(reserves) -236 | 2,757 | Balance sheet + statement of changes in equity / p19 📄 p.19 | equity_ex_oci = 2,757 - (-236) = 2,993; NCI 77 kept in IC for consolidated NOPAT/IC consistency; equity-to-parent 2,680. |
| Cash 477; excess cash 28 removed | 477 | Balance sheet / p19 (also p10) 📄 p.19 | operational_cash = min(477, 2% x 22,432 = 449) = 449 retained in IC; only 28 excess removed. |
| IFRS 16 lease interest -1,740 below EBIT | -1,740 | Note 13 lease finance items / p132 (FY financial-items recon p157) 📄 p.132 | Confirms lease interest is in net financial items, not EBIT - so no lease-interest add-back to NOPAT despite capitalizing leases in IC (LTM net financial items -1,840, IFRS16 portion ~-1,730). |
| Dalata acquisition - financing secured, not yet consolidated | 0 | Note 32 Events after reporting date / p142 (admin report p2109-2131) 📄 p.142 | Acquisition of Dalata's hotel operations (56 hotels), financing secured, completion 2026; only temporary management agreement at Q1 - current IC is PRE-Dalata; forward lease/debt step-up flagged, Dalata NOT added to IC. |
| Occupancy 64.1% / RevPAR 816 - normalized not peak | 64.1 | Year in brief / p5 📄 p.5 | Occupancy 64.1% (2024 61.8%), still below pre-COVID ~66-68%; combined with falling absolute EBIT, supports retaining LTM headline rather than a mid-cycle haircut. |