Event Hospitality & Entertainment Limited

EVT Details

FY21 Performance Update: Event Hospitality & Entertainment Limited (ASX: EVT) is engaged in cinema exhibition operations in Australia and New Zealand. It also owns, operates, and manages hotels, resorts and rental properties.

• The company reported total revenues of $692.45 million in FY21, down 32.8% year over year, due to COVID-19 restrictions. However, H2 FY21 revenue grew by 12.8% on the pcp.
• It made a loss of $48.04 million during the year, against a loss of $56.98 million in FY20.
• The company achieved a positive normalised EBITDA of $27.2 million in FY21, down from $96.55 million in the prior year.
• In FY21, the company reported $33.45 million revenues from the Hotels & Resorts division, compared to $61.02 million reported in the year-ago period.
• It ended the period with a cash balance of ~$120.98 million as on 30 June 2021.

Trend in Cash Position (Analysis by Kalkine Group)

Key Risks: The onset of the COVID-19 pandemic has impacted the company's operations, and the uncertainty in business conditions still prevails.

Outlook: The company remains on track to grow its existing revenue, with enhanced sales models and structures, product innovation and divestment of non-core assets. The company also expects a quick rebound post the upliftment of the restrictions. The medium to long term outlook seems to be positive for the company with short term challenges in lockdown restrictions.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation (Illustrative)

Source: Analysis by Kalkine Group

*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation: The stock of EVT gave a positive return of ~72.86% in the past one year. The stock is currently trading higher than the 52-weeks’ average price level band of $7.76 - $14.67. The stock has a support level of $11.2 and a resistance level of $14.67. The stock has been valued using an EV/Sales multiple-based illustrative relative valuation method and arrived at a target price with a correction of low single-digit (in percentage terms). The company might trade at a slight discount to its peers’ average, considering the decline in top-line and muted net margin performance. For the purpose of valuation, few peers like Southern Cross Media Group Ltd (ASX: SXL), Nine Entertainment Co Holdings Ltd (ASX: NEC), HT&E Ltd (ASX: HT1) have been considered. EVT was recommended as a 'Hold' rating at a market price of $13.25 per share as on 23rd August 2021, with a resistance level of $14.19, which was met today. Hence, considering the aforesaid facts, current high trading levels & indicative valuation, recent rally in the stock price, decline in revenue and the key risks associated with the business, it seems prudent for investors to book profits and give a ‘Sell’ rating on the stock at the market price of $14.60, as on 24 August 2021, 12:15 PM (GMT+10), Sydney, Eastern Australia.

EVT Daily Technical Chart, Data Source: REFINITIV

Note 1: The reference data in this report has been partly sourced from REFINITIV

Note 2: Investment decisions should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the analysis has been achieved and subject to the factors discussed above alongside support levels provided.

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