Entertainment One

LN: ETO

£1901.5m market cap

409.6p last close

Entertainment One specialises in the development, acquisition, production, financing, distribution and sales of entertainment content. Its rights library is valued at US$2.0bn and is exploited across all media formats.

Investment summary

Entertainment One’s revenue mix continues to shift to Family & Brands, where good momentum continues behind Peppa Pig and PJ Masks, especially in China. The trailer for the Peppa Pig movie, to be released for Chinese New Year, had been viewed 1.5bn times on Weibo by 22 January. Film & TV is part-way through its transition from distribution to content production, with divisional EBITDA also affected by an H2-weighted release schedule. The net effect was a group EBITDA margin of 14.8% (H118: 13.3%) at the half way stage. CEO Darren Throop has sold 1.5m shares to fund a personal project but retains a holding of 7.2m. Changing consumption patterns provide a strong backdrop to high-quality content providers such as eOne. We regard the shares as attractively priced on earnings and with regard to the portfolio valuation of $2.0bn.

Y/E Mar
Revenue (£m)
EBITDA (£m)
PBT (£m)
EPS (p)
P/E (x)
P/CF (x)
2017A 1082.7 160.2 129.9 20.0 20.5 4.2
2018A 1044.5 177.3 144.4 21.9 18.7 3.9
2019E 1135.0 195.0 159.5 24.5 16.7 3.4
2020E 1250.0 215.0 183.0 27.9 14.7 2.9
Last updated on 20/02/2019
Industry outlook

SVOD is rapidly gaining share, growing at a reported 20% CAGR. Competition between platforms is driving the requirement for premium content and, despite the proliferation of non-linear distribution channels, there is still a tendency for the audiences to gravitate towards particular hits. This is driving a trend to high production values, with the real underlying competition to grab and maintain audience attention.

Last updated on 20/02/2019
Sector
TMT
Share price graph
Balance sheet
Forecast net debt (£m) N/A
Forecast gearing ratio (%) N/A
Price performance
%
1m
3m
12m
Actual 5.7 12.0 40.0
Relative* 2.2 7.7 41.2
52-week high/low 447.6p/268.0p
*% relative to local index
Key management
Darren Throop CEO
Joe Sparacio CFO
Mitzi Reaugh Non-executive director

Content on Entertainment One