Morningstar | Ardent Leisure Closes Fiscal 2018 with Some More Slate-Wiping. See Updated Analyst Note from 29 Jul 2018
We retain our AUD 2.00 fair value estimate on Ardent Leisure, despite dreary fiscal 2018 earnings estimates released ahead of the Aug. 22 reporting date.The likely AUD 86 to 94 million net loss at the reported level is ugly, reflecting another AUD 89 million in second-half pretax nonrecurring impairments mainly related to slow-recovering Dreamworld (AUD 52 million) and underperforming U.S. Main Event centres (AUD 40 million). However, fiscal 2018 was always heading for an ugly end and who can blame the revamped board/management for doing a little slate-wiping before the start of a fresh fiscal year.
At the underlying level, the released numbers are broadly in line with our previous estimates. For Main Event, normalised fiscal 2018 EBITDA guidance of AUD 62 to 65 million broadly marries with our AUD 62 million forecast, with 1.6% constant-centre revenue growth higher than the 1.3% reported at the half-year mark. Theme Parks' normalised fiscal 2018 EBITDA loss guidance of AUD 5 to 9 million is disappointing relative to our prior AUD 4 million positive EBITDA forecast, necessitating the incremental AUD 52 million devaluation mentioned above. Still, we maintain our expectation of the division reaching EBITDA of AUD 32 million in five years' time, as sentiment and attendance gradually recover, driving a lift in margin to 30% (near the historical six-year average of 32% before the Dreamworld tragedy).
It is this focus on future sustainable earnings for both theme parks and Main Event that is underpinning our AUD 2.00 intrinsic assessment for no-moat-rated Ardent. The process of reaching this midcycle earnings point is likely to be prolonged but the comprehensively overhauled management team deserves time to execute the turnaround. Reassuringly, it will tackle the challenge with a solid balance sheet, with fiscal 2018-end net debt projected at just AUD 11 million (versus our prior AUD 17 million forecast), equating to net debt/EBITDA of just 0.2 times.
Ardent Leisure invests in and operates leisure and entertainment businesses in Australia, New Zealand and the U.S. Co. is organised into the following divisions: Marinas, which comprises seven d'Albora Marina properties, located in New South Wales and Victoria; Family entertainment centres, which comprises of 27 Main Event sites in the U.S.; Bowling centres, which comprises 48 bowling centres and six amusement arcades located in Australia and New Zealand; Theme parks, which comprises Dreamworld and WhiteWater World in Coomera, Queensland and the SkyPoint observation deck and climb in Surfers Paradise, Queensland; as well as Health clubs, which comprises 76 clubs in Australia.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
We have operations in 27 countries.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.