Ardent Leisure Group

AAD Details
· One-time events impacted the first half performance: Ardent Leisure Group (ASX: AAD) stock crashed over 21.76% on February 23, 2017 due to their weak first half of 2017 performance. Dreamworld tragedy coupled with the sale of Health Clubs and closure of Kingpin Crown for refurbishment affected the group’s performance during the period. On the other hand, Ardent got $260 million from the Sale of Health Clubs with $45 million of profit. Moreover, the group also agreed to sell d’Albora Marinas for $126 million, which is an 11% premium over book value. As a result, Ardent enhanced their balance sheet positioning them to fund Main Event’s 200 store US roll-out opportunity. The group’s Main Event segment opened four centers during the half and intends to open a further seven in FY17. Main Event US roll-out is on track wherein the group expects new centers to deliver an average first year EBITDA returns on investment exceeding 30%. Management also expects Dreamworld to recover over the course of time, driven by new attractions and branded retail concepts, boosted by promotion to domestic and international visitors. Theme Park businesses would be driven by domestic and international tourism to the Gold Coast for the 2018 Commonwealth Games as well as the development of land adjoining the property in Coomera.

· Recommendation: We give a “Hold” recommendation on the stock at the current price of – $ 1.69
 

Financial Performance (Source: Company Reports) 

McGrath Ltd

MEA Details
· Lower than estimated performance: McGrath Ltd (ASX: MEA) stock fell over 4.7% on February 23, 2017 given the weak bottom line performance. The group’ pro forma revenue fell 8% to $67 million in the first half of 2017 while the pro forma EBITDA crashed 37% to $9.3 million. As a result, pro forma NPAT slipped 72% to $2.4 million during the period. On the other hand, the group reported for a rise in market share up to 3.6%. MEA has a cash of $5.3 million with no bank debt. The group has been expanding their presence into new markets by opening nine new offices, three new company owned offices in NSW, and six new franchise offices in NSW and Victoria. Overall, they expanded their network to 96 offices during the period.

· Recommendation: We give a “Speculative Buy” on the stock at the current price of – $ 0.61 

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