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49.0¢ coast entertainment holdings limited

Ann: Response to letter to Ardent shareholders, page-36

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Roundsole

476 Posts.

59

06/11/23

16:29

Post #: 70752206
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Originally posted by Shistonsou.: ↑

Hi guys
I have followed this business since May 2020 and on Friday afternoon took a position finally joining you all as a fellow SH - picked up a fair chunk in the low 50s. I love where Ardent is positioned at present with 60% of the market valuation being cash-backed and 77% of the market val (approx $190m) backed by cash + the surplus land at dreamworld (valued at $50m). The strong balance sheet provides downside protection and in combination with the recovering earnings from the theme parks business is what attracted me and is what makes this a deep value play . Lets not dismiss the $14m USD ($21m AUD) contingent consideration payable to ALG by the 'main event' acquirer - which I note is not added to the balance sheet however is clearly an asset which one could add to their ALG valuation.. I commend management on their disposal of the main event business and the special distributions to shareholders made this time last year. This was by no means an easy feat..
Further the $50-60m on new investments / attractions will add value to the surplus land asset and should be a meaningful driver of future earnings growth for Ardent medium term.

The theme parks business is recovering and is capable of generating $20-30m pa in Ebit. As mgmt has noted of late, international travellers are making up only 2% of the earnings at present! In the good years 20% of earnings came from international travellers..so as travel improves I expect earnings to improve significantly in the coming 18 - 24 months from that aspect. I came across this in the AFR this week which notes that volumes at GC airport are back to pre-covid levels.

"...Volumes at QAL are back to pre-pandemic levels, with more than 3.8 million passengers passing through their gates in the six months to June 30. Last month, in fact, was the busiest June on record, according to the latest figures circulated by QAL. Townsville had more than 153,000 passengers through its terminals that month – higher than the previous record in 2012 – while Gold Coast had 482,000 passengers. The previous record was in 2019. That was partly due to new connections – there are flights from Townsville to Toowoomba Wellcamp, and from the Gold Coast to Kuala Lumpur and Bali..."

Finally, I am looking fwd to seeing what capital management decisions are made in August. The pressure placed on ALG's management team by Kingston & Co was way overdone however management are looking at capital mgmt initiatives as theyve communicated clearly. They've stated they want to hold a cash buffer but on back of the envelope figures I dont see why they couldnt announce a one-off distribution of say 4-5c August (and make payment shortly after in September) which would equate to $19.2m - $24m of payments to shareholders. Even then they'll be able to maintain a robust net cash position of $50-60m even after the $50-60m capital expenditure made on new investments at the surplus land at Coomera.

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Prices are lower, you can pick up some more.

ALG Price at posting: 46.0¢ Sentiment: Buy Disclosure: Held
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(20min delay)
Last 49.0¢		Change 0.005(1.03%)		Mkt cap ! $220.3M

Open	High	Low	Value	Volume
48.8¢	49.0¢	48.5¢	$26.12K	53.37K

Buyers (Bids)

No.	Vol.	Price($)
19	172858	48.5¢

Sellers (Offers)

Price($)	Vol.	No.
49.0¢	46791	10

View Market Depth

No.	Vol.	Price($)
19	172858	0.485
4	101013	0.480
3	48800	0.475
3	144800	0.470
2	19800	0.465

Price($)	Vol.	No.
0.490	46804	10
0.495	59862	3
0.500	721606	14
0.505	19610	4
0.510	8000	2

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Ann: Response to letter to Ardent shareholders, page-36

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