With its cinemas set to reopen imminently, a new endorsement of the continuing appeal of the big screen is a topical boost for Everyman. Despite growing competitive forces such as streaming, cinema has been the most missed out-of-home entertainment activity during lockdown, according to a Film Distributors’ Association survey, with 76% planning a cinema visit within two months. Such pent-up demand, proven where markets have reopened, and a recovering mainstream film slate, driven by a backlog of prime releases and complemented by Everyman’s innovative programming and broadening customer offer, bodes well for a resumption of its success before the pandemic (2019 pre-IFRS 16 EBITDA up 33%, albeit expansion-led). Everyman’s growth prospects as a well-funded operator with a strong pipeline may only be enhanced by COVID-19 fallout.
Everyman Media |
Home is not where the heart is
|
Media |
QuickView
7 May 2021 |
Share price graph
Share details
Business description
Bull
Bear
Analysts
|
With its cinemas set to reopen imminently, a new endorsement of the continuing appeal of the big screen is a topical boost for Everyman. Despite growing competitive forces such as streaming, cinema has been the most missed out-of-home entertainment activity during lockdown, according to a Film Distributors’ Association survey, with 76% planning a cinema visit within two months. Such pent-up demand, proven where markets have reopened, and a recovering mainstream film slate, driven by a backlog of prime releases and complemented by Everyman’s innovative programming and broadening customer offer, bodes well for a resumption of its success before the pandemic (2019 pre-IFRS 16 EBITDA up 33%, albeit expansion-led). Everyman’s growth prospects as a well-funded operator with a strong pipeline may only be enhanced by COVID-19 fallout.
Lights on
Despite the continued challenge of COVID-19 response and disruption (nine weeks of closures and 17 weeks of restrictions, hence a 75% fall in revenue), H220 saw further refinement of Everyman’s offer. This included imaginative programming, eg ‘lockdown house parties’ and the first pantomime to be filmed for cinema, a wider food and drink menu as well as takeaway during closures, increased social media engagement (Instagram followers up 29% in 2020) and, impressively, a maintained commitment to prime site expansion with two openings (King’s Road, Chelsea and Lincoln; seven screens). When allowed to trade, business was brisk, ie on summer 2020 reopening at c 40% of 2019 levels despite social distancing and limited content. Indeed, ‘Tenet’ showed the strength of demand for a blockbuster in a cinema setting, which was only slightly below management’s pre-COVID-19 expectations.
Ready to grow
With liquidity headroom of c £21m at end 2020, a new £10m increase in facilities to £40m appears targeted for expansion. While the growth strategy has been paused, at September 2020 the pipeline for 2021/22 was eight venues. A fragile property market on pandemic fallout should prompt site availability on advantageous terms.
Valuation: Long-term appeal
Despite positive fundamentals, financial recovery may be protracted, given continued COVID-19 measures on reopening and possible delays in high-quality film releases. With no consensus forecasts available for Everyman, we note that rival Cineworld’s revenue is not expected to return to 2019 levels until 2022/23.
|
Consensus estimates
Source: Refinitiv. Note: *Pre-IFRS 16 (net bank debt £9.7m). **FRS 3. |
EDISON QUICKVIEWS ARE NORMALLY ONE-OFF PUBLICATIONS WITH NO COMMITMENT TO WRITING ANY FOLLOW UP. QUICKVIEW NOTES USE CONSENSUS EARNINGS ESTIMATES.
|
||||||||||||
|
||||||||||||
Research: Consumer
bet-at-home’s (BAH) Q121 results are strong in the context of management guidance for FY21. Trading in the early part of FY21 is likely to be as bad as it gets for BAH. The initial (negative) effects of regulatory changes in Germany will be followed by a more favourable sporting calendar and management’s belief that increased legal certainty from Q321 will help the company to better plan and develop its business. Management is optimistic that regulated companies should be able to take share from the black market, which it believes may be more than 30% of the total market. We upgrade our FY21 EBITDA forecast by 11%, taking it above management’s reiterated guidance. Our DCF-based valuation increases to €51 per share.