Analysts say these 3 venue stocks are due a re-rating
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ASX-listed venue stocks are bearing a major financial impact from the COVID-19 pandemic, but analysts are tipping a number of them to bounce back strongly.
One is theme park operator Ardent Leisure Group (ASX:ALG) which operates several leisure assets.
The most famous of these are DreamWorld theme park on the Gold Coast and US-based Main Event Entertainment, which runs entertainment venues from bowling alleys to laser tag complexes.
Broker EL&C Baillieu yesterday tipped the stocks to rise 50 per cent from 50 cents to 75 cents.
Ardent sold down nearly a quarter of its stake in Main Event to US private equity group RedBird for US$80 million ($116 million). The broker noted this deal significantly reduced financial risk.
The deal came with an option for RedBird to take a further 26.8 per cent stake between 2022 and 2024.
“While this may look like a transaction of necessity given current circumstances, it must be remembered that COVID-19 appears to be in less control in the US, where ME operates, and the resumption of new ME site roll-outs will retard margins in the short term and require funding,” said analyst Nick Caley.
28 of 44 Main Event sites have re-opened and it has flagged July as the month where many of its Queensland sites will re-open. However it is holding off making a definitive date until it knows when the Sunshine state’s borders will re-open.
Another is casino operator Skycity (ASX:SKC) which only today announced NZ$230 million capital raising ($215 million).
Its New Zealand casinos are back to business as usual due to New Zealand’s lifting of COVID-19 restrictions. Skycity’s Adelaide casino remains shut but it expects re-opening in the coming weeks.
New Zealand based Craigs Investment Research tipped the stock yesterday to rise to $3.40. This would be a 32 per cent rise to today’s $2.56 price. Craigs noted the lower financing risk and that customers were returning.
The company first received the offer in May and discussions have continued since then. It last updated the market on Tuesday, noting the exclusivity period for discussions had been extended for another two weeks to June 30.
Village has set individual re-opening dates for some of its theme parks. Sea World is the first to re-open on Friday June 26.
However, it will have to make do with less capacity given social distancing guidelines and temporary state border closures. It hopes to return to normal visitor capacity by the September school holidays.