Research: Consumer
Kinepolis is ‘ready to tango’, according to management, after impressive FY23 results defied last year’s Hollywood strikes (H2 adjusted EBITDA up 26% despite 2% fewer visitors in Q4). Its confidence is compounded by an improving film slate on the strikes’ resolution (eg blockbuster Dune: Part Two postponed from 2023) as well as clear post-pandemic expansion opportunities, heightened by the impact of the strikes and enabled by the company’s strong finances. However, premiumisation remains at the fore (eg 5.5% higher FY23 in-theatre sales per visitor, currency adjusted) with FY24 set to benefit from dining (a potentially transformative new offering), initial 270-degree ScreenX installations, further premium seating and recent IMAX openings. Consensus FY24 EBITDA forecasts of €198m give an EV/EBITDA of c 9.2x.
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25 March 2024 |
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Kinepolis is ‘ready to tango’, according to management, after impressive FY23 results defied last year’s Hollywood strikes (H2 adjusted EBITDA up 26% despite 2% fewer visitors in Q4). Its confidence is compounded by an improving film slate on the strikes’ resolution (eg blockbuster Dune: Part Two postponed from 2023) as well as clear post-pandemic expansion opportunities, heightened by the impact of the strikes and enabled by the company’s strong finances. However, premiumisation remains at the fore (eg 5.5% higher FY23 in-theatre sales per visitor, currency adjusted) with FY24 set to benefit from dining (a potentially transformative new offering), initial 270-degree ScreenX installations, further premium seating and recent IMAX openings. Consensus FY24 EBITDA forecasts of €198m give an EV/EBITDA of c 9.2x.
H223: A tale of two quarters
While the success of Barbie and Oppenheimer, topping a recovery in Hollywood film offering, made Q3 a hard act to follow (attendance up 42%), year-on-year visitor numbers fell by 2% in Q4, with October reportedly ‘empty’, largely reflecting the extended strikes by the Writers Guild of America and the Screen Actors Guild, which had halted the production, release and promotion of certain films. However, taken in the round and mindful of the innate volatility of quarterly cinematic reporting, it is testimony to the resilience of Kinepolis that H2 adjusted EBITDA rose by over a quarter year-on-year with higher revenue per visitor, driven by a strategic focus on premium products and experiences. Moreover, the Q4 hiatus, with encouragingly maintained investment, did not prevent a continued reduction in net financial debt to €378m, down 11% on FY22, and 2.5x pre-IFRS 16 EBITDA.
Home is not where the heart is
The scope for premiumisation and profit boost, given operating leverage, is highlighted by management’s belief in a feasible doubling of revenue per visitor over the next few years. With optimising in-person experience key to attendance, the provision of premium products is increasingly being rewarded in terms of rising customer satisfaction and pickup, thereby denying perceived price fatigue and arguably endorsing the reasonableness of current average c €15 spend for a few hours of entertainment. Management believes the launch of dining (details to be released soon) could ‘move the needle’.
Valuation: Fair
Amid industry uncertainty about the pace of recovery from the impact of the strikes, Kinepolis FY24e EV/EBITDA of 9x is similar to that of peers Everyman and AMC.
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Consensus estimates
Source: Kinepolis. Note: *Excluding exceptionals. |
EDISON QUICKVIEWS ARE NORMALLY ONE-OFF PUBLICATIONS WITH NO COMMITMENT TO WRITING ANY FOLLOW UP. QUICKVIEW NOTES USE CONSENSUS EARNINGS ESTIMATES.
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Research: Healthcare
IRLAB Therapeutics has confirmed the FDA’s alignment with its proposed Phase III programme for mesdopetam in levodopa-induced dyskinesias (PD-LIDs), following receipt of the minutes from its end-of-Phase II (EoP2) meeting held last month. Notably, the FDA has agreed on the primary endpoint being the Unified Dyskinesia Rating Scale (UDysRS), on which mesdopetam demonstrated a statistically significant improvement (p=0.026) in the Phase IIb study (secondary endpoint of that study). IRLAB will now engage with European regulatory agencies to prepare for the Phase III trial. Following the positive endorsement from the FDA, we expect partnering talks to intensify in the coming weeks, with the partner taking on responsibility for further clinical development.