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Treasure Chest: Event Hospitality & Entertainment

Treasure Chest | Oct 25 2022

This story features EVT LIMITED. For more info SHARE ANALYSIS: EVT

FNArena's Treasure Chest reports on money making ideas from stockbrokers and other experts.

By Greg Peel

Whose Idea Is It?

Analysts at Jarden.

The subject:

Event Hospitality & Entertainment ((EVT)) owns, operates, and manages hotels and resorts, including Thredbo Alpine, is involved in film exhibition operations and cinema technology solutions, and invests in and develops properties in Australia, New Zealand and Germany.

Clearly the covid lockdown and border closure years were not kind to the company. But resultant pent-up consumer demand following the lifting of restrictions has meant the consumption of “experiences” over goods has been the feature of 2022.

Last week the company provided a September quarter update that showed revenues flat on the pre-covid period but earnings up 32.5%. Following the success of a recent non-core property divestment program, the board was able to deliver a 12c special dividend to shareholders and regular dividend payments should resume from the next result in February.

Jarden notes Thredbo and Hotels were the main drivers in the quarter with a stronger ski season and a rebound in travel offsetting a quiet movie slate in August and September. Jarden expects demand for travel to remain elevated, particularly as airline capacity returns to pre-covid levels and international travellers return.

The broker further believes blockbuster movie releases in the December quarter such as Black Panther: Wakanda Forever and Avatar: The Way of the Water should drive audience numbers in the Entertainment business above the September quarter level.

Although Thredbo had a very strong start to FY23, Jarden does not expect the same level of performance in the summer season, but demand for mountain biking should provide a positive earnings contribution.

Jarden has lifted its FY23 earnings estimate by 18% to reflect the stronger trading update, retaining an Overweight rating. Higher interest rates impacting on discounted cash flow assumptions mean a target price cut to $16.99 from $17.42 (last trade $14.13).

More info:

Event Hospitality & Entertainment’s result again highlights to JPMorgan the positive changes implemented by management through the covid period, but the broker notes the next stage in the revenue recovery relies heavily on movie releases and international arrivals to see both the Entertainment and Hotels divisions return to pre-covid levels.

International arrivals are still only tracking at around 60% of pre-covid levels, JPMorgan notes, so there is still some way to go, although elevated room rates will continue to be an offsetting factor in the short term.

This broker thus retains Neutral, while lifting its target to $15.50 from $15.00.

Citi retains Buy and has lifted its target to $17.85 from $17.17.

Citi estimates its forecast for all of the first half has already been achieved in the first quarter. Aside from the performance of Thredbo and Entertainment, Citi acknowledges an additional benefit from a weakening AUD.

Citi highlights management has identified another $100m of properties for potential sale and has nominated this company as one of the Top Picks among ASX-listed small caps.

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