Citi sees merit in Australia's Ardent Leisure delaying sale of Main Event

Coast Entertainment Holdings

12/04/2022 22:06

** Citi Research says there is potential for Ardent Leisure
Group  ALG.AX  to achieve a higher price for its stake in U.S.
entertainment business - Main Event - if it delayed the sale by
a couple of years
    ** ALG said last week that it will sell its stake in Main
Event to restaurant and arcade chain operator Dave & Buster's
Entertainment  PLAY.O  for $835 million  urn:newsml:reuters.com:*:nL3N2W4191
    ** Citi, however, sees merit in ALG delaying sale of Main
Event by a few years given that the U.S. business' earnings is
estimated to be ~20% higher in CY23 relative to CY21 
    ** ALG expects to use proceeds from sale to invest in its
theme parks business and return ~A$430 mln or A$0.90 per share
to its shareholders 
    ** Citi sees upside to ALG's theme parks business and
expects its earnings to improve as borders re-open
    ** Citi, however adds that the deal provides downside
protection for ALG, should the U.S. consumer appetite
deteriorate from inflation and higher interest rates
    ** Citi estimates ALG is worth at least A$1.45 per share;
retains "buy" rating
    ** ALG stock down 0.4% this year, as of last close

 (Reporting by Harish Sridharan in Bengaluru)
 ((harish.sridharan@thomsonreuters.com;))