Village Roadshow Ltd (ASX: VRL)

Expects a weak first half: Village Roadshow’s trading update based on the first 6 months to 31 December 2017 has been weak owing to which the stock has been slammed by the investors. VRL nose-dived 10.7% on January 30, 2018 at the back of the update post a 5.6% rise in last one month. Particularly, Group’s Theme Parks and Cinema Exhibition experienced challenging trading conditions in the first 6 months. This is expected to result in a soft half year performance against the prior corresponding period (1H FY2017). The sale of the Company’s land at Oxenford, Qld, which was completed in December 2017, is expected to be treated as a finance lease in accordance with the requirements of accounting standards, and the Company will not record a profit on sale in its reported results. The accounting for this long-term lease is still being finalised.

The group’s woes have continued from the October 2016 tragedy at Ardent Leisure’s amusement park Dreamworld, while cinema division was affected from release schedules. However, the full year results are flagged to see some improvement as the ticket sales in January 2018 at its Theme Parks on Gold Coast were better than expected. Further, cinema business has been expected to be on a recovery track in the second half. VRL also aims to repay its debt using the proceeds of Singapore business’ sale and Oxenford land.

The group expects its full-year net profit before material items and discontinued operations to be in the range of $12 million to $17 million while FY17 full-year statutory loss was $66.7 million.
We have a “Hold” on the stock at the current price of $3.67

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