Entertainment One’s (eOne’s) pre-close trading update confirms the group is trading well and is on track to meet full-year market forecasts. There is no change to our forecasts at this juncture. The group’s rights library has been independently reassessed and has increased to a value of US$2.0bn, from US$1.7bn at the time of the last valuation in March 2017. The group’s current market capitalisation is c £1.8bn (US$2.3bn). Recent strong share price performance has narrowed the discount to peers, but further positive news flow would allow additional upside.
Entertainment One |
Library valuation uplift |
Trading update |
Media |
27 September 2018 |
Share price performance
Business description
Analysts
Entertainment One is a research client of Edison Investment Research Limited |
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Entertainment One’s (eOne’s) pre-close trading update confirms the group is trading well and is on track to meet full-year market forecasts. There is no change to our forecasts at this juncture. The group’s rights library has been independently reassessed and has increased to a value of US$2.0bn, from US$1.7bn at the time of the last valuation in March 2017. The group’s current market capitalisation is c £1.8bn (US$2.3bn). Recent strong share price performance has narrowed the discount to peers, but further positive news flow would allow additional upside.
Year |
Revenue |
EBITDA (£m) |
PBT |
EPS |
DPS |
P/E |
Yield |
03/17 |
1,082.7 |
160.2 |
129.9 |
20.0 |
1.3 |
19.1 |
0.3 |
03/18 |
1,044.5 |
177.3 |
144.4 |
21.9 |
1.4 |
17.5 |
0.4 |
03/19e |
1,208.6 |
193.4 |
154.9 |
23.6 |
1.5 |
16.2 |
0.4 |
03/20e |
1,353.3 |
215.0 |
177.0 |
26.8 |
1.6 |
14.3 |
0.4 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, share-based payments
In our recent update following the Capital Markets Day, we discussed the group’s transition to a pure-play content business, as well as describing the key trends and properties in the underlying segments. This morning, management has confirmed that Family & Brands continues its positive momentum in negotiating licence and SVOD (streaming video on demand) deals. In Film & Television, the trading update confirms a good pipeline of new series in development, underpinning our forecasts for this division.
The group’s library has been independently revalued, having last been assessed on 31 March 2017, and has appreciated at a healthy rate. It is now worth US$2.0bn, up from US$1.7bn, reflecting the investment in content over the intervening period. This figure is net of a US$64m one-off charge (US$60m is non-cash). Around half of this charge impacts the library valuation, the balance relates to costs associated with the shift of emphasis in the business to pure content.
Our forecasts are unchanged.
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Disclaimer
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Disclaimer
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Immutep has entered into a clinical trial collaboration and supply agreement with Merck/Pfizer to investigate the combination of its APC activator eftilagimod alpha (efti) with avelumab in patients with advanced solid tumors. Avelumab is the big pharma pair’s investigational anti-PD-L1 immune checkpoint inhibitor (ICI). We view the additional validation from big pharma is as a very positive development for Immutep, which could bring the added bonus of early identification of additional target indications. We maintain our valuation at $387m or $12.80/ADR.