Ardent Leisure Group


AAD Details

Conclusion of sales process for the d’Albora Marinas portfolio and reopening of Whitewater World water park and Dreamworld theme park:Ardent Leisure Group (ASX: AAD) has successfully concluded sales process for the d’Albora Marinas portfolio for a sale price of $126 million (11% premium over current book value of $113.5 million) with a special purpose vehicle jointly owned by Balmain Corporation and Goldman Sachs. This move is expected to improve the balance sheet capacity of the group. AAD lately announced for the re-opening of Whitewater World water park and Dreamworld theme park from 10^th December 2016 post the successful completion of the mechanical and operational safety review. AAD stock has fallen 12.6% in the last three months (as on December 09, 2016) due to closure of both Dreamworld and Whitewater World throughout the month of November 2016 owing to a fatality. This closure led to revenue loss and the Theme Parks division loss and the group expects to incur operating costs in the range of $4.0 million to $4.2 million for the month. Additionally, for the month of November 2016, Dreamworld is also expected to incur about $1.6 million in one?off costs related with the tragedy (net of expected insurance recoveries). In addition, Workplace Health and Safety QLD (WHSQ) inspectors have issued two notices for WhiteWater World and eight notices for Dreamworld. On the other hand, AAD has made strategic decisions and in the last twelve months the company has divested the non?core Marina and Health Clubs divisions. The group also indicated that the Main Event Entertainment will form about half of the group’s earnings and AAD’s board might change the name for the group to the “Main Event Entertainment Group” to reflect the new focus on the entertainment business. The stock has been up 6.5% in the last five days (as at December 09, 2016). AAD has a decent dividend yield and we give a “Hold” recommendation on the stock at the current price of $2.29
 

AAD Daily Chart (Source: Thomson Reuters)
                                                                        
Aristocrat Leisure Limited


ALL Details

Average fee per day and average selling price grew in FY 16:Aristocrat Leisure Limited (ASX: ALL) has reported a 68.7% growth in the NPATA result of $398.2 million in FY 16. ALL has posted a significant market share growth across the US premium gaming operations segment and outright sales segments in the US, Australia and Asia Pacific, due to increases in the average fee per day and average selling price. ALL’s Digital segment also performed well. ALL has reported a 34.5% growth in the total revenue in reported terms to a record of over $2 billion, and the EBITDA has grown over 54% in reported terms in FY 16 against prior corresponding period. Moreover, ALL sees continued growth in FY 17, and will invest in the product portfolios related to the core business and will pursue opportunities in new markets.
 

FY 16 Financial Performance (Source: Company Reports)
 
On the other hand, investors have concerns over the management changes wherein CEO & Managing Director, Jamie Odell, intends to leave the company in February 2017 while Trevor Croker has been appointed as CEO (Elect), who will join from March 2017. Moreover, concerns persisted regarding allegations by Maurice Blackburn over poker machines being claimed as misleading and deceptive. ALL stock has risen 15.4% in the last six months (as on December 09, 2016) placing them at higher levels given the prospects. We give an “Expensive” recommendation on the stock at the current price of $15.21
 

ALL Daily Chart (Source: Thomson Reuters)

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