The Entertainment industry of Australia has been a major contributor of the growing economy of Australia This industry has to contend with the businesses like casino, online gaming, video streaming etc. As per the media reports, the industry is expanding at an extraordinary pace with online video as the leading driver of growth. Adding to that, rising share of entertainment revenue is being fueled by smartphones and the applications that they support. At the time of writing, 21st Aug 2019 (AEST 2: 43 PM), the S&P/ASX 200 Consumer Discretionary Sector is trading at 2,513.2 with a fall of 0.55% in the day’s trade. Let’s have a look at three performers of entertainment sector:
Crown Resorts Limited
Crown Resorts Limited (ASX: CWN) is an international casino and gaming entity having its businesses and investments in international markets. Through the release dated 21st Aug 2019, the company updated the market about its FY19 financial performance. The company announced that it will be conducting its Annual General Meeting on 24th October 2019. According to the company, the financial results for FY19 represented the subdued economic conditions. For FY19, the company witnessed a decline of 5.4% in total normalised revenue as compared to the corresponding prior-year period largely because of to the reduction in VIP program play revenue in Australia, which was down 26.1% over the year-ago period.
The company highlighted its major contribution to the Australian economy through employment generation, training, tourism as well as its corporate social responsibility programs. As per media reports, the company has been allegedly involved in junket operations.
The company’s reported normalised net profit after tax amounting to $368.6 million, reflecting a fall of 4.7% year over year and reported NPAT (net profit after tax) attributable to the parent stood at $401.8 million, with a gain of 23.0% before significant items or down by 28.1% after significant items. The company delivered normalised EBITDA of $802.1 million, reflecting a decline of 8.7% while reported EBITDA was $849.7 million, which increased by 7.2% over the corresponding prior-year period.
The Crown Melbourne delivered normalised EBITDA amounting to $589.5 million, with a fall of 8.6% over the comparable prior-year period and reported EBITDA for FY19 stood at $615.0 million, reflecting a rise of 4.9% over the same period. The reported EBITDA considers the positive variance from the theoretical VIP program play result which had a favourable EBITDA impact amounting to $25.5 million. The normalised VIP program play revenue stood at $441.4 million registering a decline of 25.4% over the year-ago period on a turnover of $32.7 billion. When it comes to Crown Perth, the Normalised EBITDA amounted to $221.8 million, reflecting a fall of 10.8% as compared to prior-year period. The reported EBITDA for FY19 was $244.6 million, up by 10.4% over the corresponding prior-year period and considers positive variance from the theoretical VIP program play result which had a positive EBITDA impact of $22.8 million.
For FY19, the company has declared a final dividend of 30 cents per share on ordinary shares, which is franked to 25% with the unfranked portion of the dividend declared to be conduit foreign income. The final dividend is payable to shareholders on record on 20 September 2019 and is due to be paid on 4 October 2019.
On 21st Aug 2019, the stock last traded at A$11.570 per share, up 1.313% from the closing price on the previous day. At the end of trading session, the market capitalisation of the company stood at A$7.73 billion. With respect to the performance of stock, it produced returns of -1.13%, -12.36% and -10.29%, in the time frame of six months, three months, and one month respectively.
Aristocrat Leisure Limited
Aristocrat Leisure Limited (ASX: ALL) is engaged into designing, manufacturing, developing and marketing of numerous products and services, which include electronic gaming machines, casino management systems etc. As per the release dated 4th July 2019 the company updated the market that it has initiated legal proceedings against Ainsworth Game Technology Limited. The reason behind legal proceeding was infringement of intellectual property rights as well as breach of Australian Consumer law by Ainsworth Game Technology Limited. In another update, the company announced that Trevor John Croker, the chief executive officer of the company, has made a change to his interest in the company by acquiring 116,390 LTI performance share rights on 12th June 2019.
Operational and Financial Performance:
In the Americas Segment, it posted record earnings (profit) amounting to US$ 373.8 million in 1H FY19 as compared to US$ 319.1 million in 1H FY18, reflecting a rise 17.1% with continued growth in premium Gaming Operations and market share gains in Outright Sales. The Americas segment witnessed a rise in ship share, which was primarily fueled by successful move into new adjacent markets. There was growth of 7% and 12% in revenues and earnings of Australia and New Zealand (ANZ) segment.
When it comes to the performance of group, the normalised revenue and NPATA stood at A$ $2.1 billion and A$422.3 million, reflecting a growth of 30% and 17% on year-over-year basis, respectively. The growth in NPATA has primarily resulted from the strong growth throughout North America and Digital with a further support from Australia and New Zealand performance.
Post strong earnings and cash generation, the company had an improved balance sheet by adhering to conservative borrowing metrics supported by a strong liquidity position. After the period ended (1H FY19), the company paid back debt amounting to US$100 million in May 2019.
For the six-month period ended 31 March 2019, the company declared interim fully franked dividend of 22.0 cents per share, reflecting a rise of 16% from the year-ago period. The record date and payment date of the dividend was 30th May 2019 and 2nd July 2019, respectively.
On 21st Aug 2019, the stock of Aristocrat Leisure Limited traded at A$29.200 per share, up 0.413% in the day’s trade. At the end of trading session, the market capitalisation of the company stood at A$18.57 billion. Coming to the stock’s performance, ALL produced returns of 18.02%, 6.60% and -2.15% in the time period of six months, three months, and month, respectively.
Tabcorp Holdings Limited
Tabcorp Holdings Limited (ASX: TAH) is into provisioning of gambling and other entertainment services, and got listed on Australian Stock Exchange in 1994. Recently, the company via a release announced that Justin Milne and Paula Dwyer, both non-executive directors of the company, have made changes to their holdings in the company by acquiring 4,800 and 25,000 Ordinary Shares at a consideration of $4.30 and $4.37 per ordinary share, respectively.
Performance of Fiscal Year 2019
For the FY19, the company witnessed a rise of 8.7% and 7.6% in revenues and EBITDA, respectively, in comparison to proforma results in the corresponding prior-year period. The growth is due to record Lotteries as well as Keno result from successful initiatives related to gaming portfolio. It realised savings from consolidated management structures throughout the Group. TAH implemented initiatives supporting cost synergies with a potential run rate of around $70 million into FY20.
The company further stated that the integration with Tatts is ahead of schedule. From cost synergies and business improvements in FY19, the company reported EBITDA amounting to $64 million, which surpassed the mid-year target amounted to $55 million. When it comes to balance sheet position, the company posted gross Debt / EBITDA ratio of 3.2x for the period and syndicated bank facilities amounting to $1.86 billion, which have been extended in July 2019.
In FY19, the company declared a final dividend amounting to 11.0 cents per share, fully franked, which brings fully year dividend amount to 22.0 cents per share. The company will make payment of final dividend to shareholders on 20 September 2019.
The strategy for Wagering and Media is to integrate and transform the business through enhanced digitization and data capabilities. The company further stated that on the back of investments in game innovation and technology and data capability, Lotteries & Keno business of the company is primed for sustainable growth
On 21st Aug 2019, the stock last traded at A$4.370 per share, down 1.798% from the closing price on the previous day. At the end of the trading session, the market capitalisation of the company stood at A$8.99 billion. Coming to the stock’s past performance, it delivered returns of -0.89%, -4.30% and 3.26%, in the time span of six months, three months, and one month respectively.
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