Greencross Limited

GXL Details
Ongoing expansion of the network: Greencross Limited (ASX: GXL) continued to expand their network footprint in FY16 and added 21 stores, 23 clinics (including 14 in-store clinics) and 14 grooming salons. The group remains strengthening their network for retail stores specifically for in-store clinics. GXL is also cautious over incurring costs. The group’s in-store clinics performance is better than estimated and accordingly the group’s rollout is accelerated.
 

Ongoing expansion (Source: Company Reports)
 
GXL Loyalty is rolled out nationally and loyalty card holders across ANZ represent >85% of retail sales. The group’s cross shopping by customers enhanced over 35% across multi formats in Australia. Greencross online model is also working well with the online revenues rising by 83%. The group revenue surged 14% in FY16 while NPAT was up 82%. GXL is also on track to deliver FY17 network targets of 20 new stores and 15 new in-store clinics, while the group LFL sale growth in FY17 as of October 23, 2016 is up 3.9%. GXL stock surged over 6.89% in the last four weeks (as of October 28, 2016) and we believe the momentum would continue in the coming months. Based on the foregoing, we give a “Hold” on the stock at the current price of $ 6.99
 

GXL Daily Chart (Source: Thomson Reuters)

Ardent Leisure Group

AAD Details
Focusing on Main event business: Ardent Leisure Group (ASX: AAD) stock fell over 27.6% in the last one month (as of October 31, 2016) due to Queensland Police Services (QPS) Coronial Investigation. The group has appointed Mike McKay to provide specialist advice on the Dreamworld tragedy. The group has lately redefined the strategic direction to be a pure play, global entertainment business. Accordingly, the group has been divesting non?core businesses to focus on highest?returning opportunities in their portfolio, especially the expansion of their Main Event Entertainment business in the United States. The group identified 200 suitable trade areas for Main Event growth opportunity. By adding the Hoffman Estates in Chicago and Olathe, Kansas this financial year, Main Event Entertainment centres are now 29 across 11 states, with another eight under construction with additional center planned in FY17. The portfolio is expected to grow at around 30% per annum over the next two years as the group is making efforts to expand beyond Texas. AAD has always targeted to generate a first-year EBITDA return on investment of 30% for new centers and has been surpassing this since the last five years. AAD Bowling division’s revenue surged 12.0%, while the EBITDA rose more than 30% boosted by constant centre revenue growth, contributions from new centers, and a major improvement in margins. The group’s turnaround strategy of Main Event Entertainment gained traction in FY16, which reported constant center revenue growth for four consecutive quarters. We give a “Hold” recommendation on this dividend yield stock at the current price of $ 2.00

 
AAD Daily Chart (Source: Thomson Reuters)

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