reports
Update: Rightsizing in progress
Interim results showed adjusted EBITDA from continuing operations doubled to $1.8m despite a 1.5% fall in revenue (up 7% on a constant currency basis). The new Nicaragua casino will contribute more materially to revenue and EBITDA in H215. Management continues to evaluate capital structure, possible real estate disposals and other strategic alternatives to increase shareholder value, but there was no new news on this front. Our sum-of-the-parts value is $0.90-1.66 per share with a break-up value...
Update: Q1 snapshot
Thunderbird Resort’s Q1 results showed encouraging progress despite adverse forex – adjusted EBITDA more than doubled to $0.94m. Cost-cutting and debt reduction are underway and management continues to evaluate strategic options, as discussed in our 12 May Outlook report, including unlocking value from its $75m of real estate. Our estimates are unchanged, as are our sum-of-the-parts ($0.92-1.69 per share) and break-up value ($1.54-2.68 per share), both materially ahead of the current share p...
Outlook: Strategic evaluation underway
Thunderbird has well-established casino operations in Peru and Nicaragua delivering over 17% property EBITDA margins, but is burdened with high debt and corporate costs – an historic legacy. Management is evaluating strategic options including unlocking value from its $75m of real estate. Our SOTP is $0.92-1.69 per share but a break-up value could be $1.54-2.68 per share. The share price has recovered slightly since the sale of the Costa Rica operations but still does not reflect the group’s...
Update: Disposal materially reduces debt
Thunderbird’s sale of its Costa Rica operations materially reduces its debt burden and was achieved at an encouraging EV/EBITDA (c 7.1x on our estimates) given the current pressures on the Costa Rica economy. It retains two parcels of real estate in San José, Costa Rica, which are up for sale. We now expect Thunderbird to focus on the selective expansion of its Peru operations, to strengthen underlying cash flows. We have slightly trimmed 2014 estimates post the December monthly revenue repor...
Update: Improving underlying trend
Q3 results showed an encouraging trend, with stable revenues and a 6% increase in EBITDA despite ongoing unfavourable currency translation. Our full year estimates are unchanged. Thunderbirds is continuing its selective programme of low-risk expansion (eg new slot parlours) while at the same time reducing debt. However, it still faces a bulge in repayments in 2015 and news of a successful refinancing and/or disposals of unused real estate would be a positive catalyst for the shares.
Update: Incremental expansion underway
Thunderbird’s new Costa Rica casino and Peru expansion have yet to flow through to profits and H114 EBITDA slipped by 4% at constant currency (15% reported); the PBT loss was cut by 42%. We have reduced our full year estimates, but the turnaround story remains intact. We expect the debt refinancing to be successfully concluded but believe it may take several more months, while news of asset disposals would also be helpful. The share price has fallen by 44% since our May update note and the 201...
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