TREkMadone - BOWL Hollywood16 Dec 2022 14:35
1x2 Stockopedia comments
These figures seem to be well ahead of the flash figures provided on 10 Oct 2022, which is odd. Revenue of £184.9m was guided, but actual is £193.7m.
Adj EBITDA (pre IFRS 16) was guided at about £53.5m, and has come in well above, at £60.6m. I’d like to know why the actual results are so much stronger than the trading update in Oct suggested? It might be buried in the commentary somewhere, but I don’t have time to read everything. It’s the right way round anyway - a beat against guidance, nobody ever complains about that.
Ah I’ve found it, note 5 shows exceptional items, which includes a £5.8m boost to revenues from favourable settlement of a VAT dispute.
Profit - I think it makes sense to value the shares on the (lower) pre-exceptional profit before tax (PBT) of £43.0m, less tax of £8.1m gives £34.9m PAT. Divide that by the average number of shares shown in note 10, of 171.9m, and we get EPS of 20.3p by my calculations. At 236p per share, that works out at a PER of 11.6
My PER calculation is lower than the broker consensus figure of 22.3p. The company leaves a blank space where EPS should be under the pre-exceptional results, preferring to show a higher 21.9p EPS figure which includes the one-off VAT exceptional item. It’s up to you whether you want to value the shares on the company’s more aggressive EPS figure of 21.9p (slightly below broker consensus), or my more conservative 20.3p EPS calculation.
Depreciation is obviously a big cost, around £25m, so the massive EBITDA figures come down to earth a bit at the PBT level, but are still superb, and this is a high margin business, making a superb PBT margin of 23% using the pre-exceptional numbers. In other words, right now, bowling sites are generating fantastic returns for investors, so I would expect more of them to be built, probably diluting returns long-term.
Balance sheet - is excellent. Big lease entries, with a deficit, suggest there must be some under-performing sites. Pots of cash, at £56.1m
Negligible inventories or receivables, so this is a very attractive business model which could easily operate with negative working capital - making it attractive to a bidder I would say, that could then leverage it up. Although higher interest rates don't help for that type of deal. With its fragmented shareholder base, I could see BOWL being an attractive takeover bid target, maybe from overseas or private equity, so it would be nice to hold this if a premium-priced bid came in - speculative upside there?
Cashflow statement - amazingly cash generative, which is comfortably funding expansion capex of new sites. Lots of capacity to pay…
Dividends - interim 3.0p, final 8.53p, and a special of 3.0p gives shareholders a total yield of 14.53p = 6.2% - very attractive. Moreover, the big net cash pile means that BOWL has considerably more dividend paying capacity in my view. Unless trading falls off a cliff that is.
Outlook - all sounds positive
Sign In
Follow the stocks
