Research: Consumer
The popularity of Brighton Pier Group’s (BPG’s) diversified low-ticket leisure offer underpins confidence in a significant bounce back from its FY23 ‘annus horribilis’ as well as in potential benefits from new initiatives, notably a £1 admission fee to the Palace Pier (annually over four million visitors as a free attraction) during key summer trading for non-residents of Brighton. The coincidence in FY23 of harsh weather, train strikes and protracted disruption from a fire near the company’s most important site, the Pier, is surely exceptional and it is testimony to BPG’s resilience that H223 adjusted EBITDA almost held year-on-year. As conditions normalise, despite no consensus forecasts for FY25, we see continued progress under entrepreneurial management with strong cash generation funding lucrative marginal revenue and further expansion as a consolidator.
Brighton Pier Group |
Sweating the assets
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Travel and leisure |
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21 May 2024 |
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The popularity of Brighton Pier Group’s (BPG’s) diversified low-ticket leisure offer underpins confidence in a significant bounce back from its FY23 ‘annus horribilis’ as well as in potential benefits from new initiatives, notably a £1 admission fee to the Palace Pier (annually over four million visitors as a free attraction) during key summer trading for non-residents of Brighton. The coincidence in FY23 of harsh weather, train strikes and protracted disruption from a fire near the company’s most important site, the Pier, is surely exceptional and it is testimony to BPG’s resilience that H223 adjusted EBITDA almost held year-on-year. As conditions normalise, despite no consensus forecasts for FY25, we see continued progress under entrepreneurial management with strong cash generation funding lucrative marginal revenue and further expansion as a consolidator.
Resisting Pier pressure
The introduction of an admission charge to the Pier is a reminder that UK piers in the guise of Blackpool’s similarly iconic trio helped fuel the advance in the 1980s of First Leisure into a successful leisure conglomerate. For its part, the Pier saw revenue rise by 30% over the six years before COVID-19, at a consistent EBITDA margin of 20–25%. The fee will apply at weekends from 25 May to July, then daily to end-August. Given historical annual footfall of over four million visitors and even allowing for free access by locals holding a BPG resident’s card, management’s estimate of 400,000+ receipts pa may be cautious, not least as the sum is nominal (£1.65 at Bournemouth Pier and £3 walk-only at Southend) and justified as helping meet the rising costs of a structure that is 125 years old. There should also be material incremental revenue from a longer dwell-time by those who have cared to pay and from improving the reach with Brighton residents with discounts and promotions.
Improving the mix
Further initiatives set to benefit this year include the disposal of the three loss-making bars and a more dynamic pricing structure, enhanced catering and an extended season at Lightwater Valley, a long-term growth opportunity owing to its extensive space, with planning approval for a mixed-use lodging development.
Valuation: Lacking visibility
With recovery in key summer trading expected clearly to trump a 5% fall in like-for-like sales in the quieter first 18 weeks, the company is on target to meet market forecasts. The share price is at a steep discount to NAV (61p adjusted for £4.6m gain on bar disposals).
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Consensus estimates
Source: Company-compiled. Note. *Excluding exceptionals. **Pro forma for the sake of consistency following change of year end to December. |
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: Consumer
Borussia Dortmund’s Q324 results demonstrated some phasing but it has made good progress year-to-date. The focus of attention now is the team’s progress to the Champions League final for the first time since 2013, having beaten more-favoured (by the bookmakers) and higher-funded teams along the way. Despite being less successful than usual in the Bundesliga, the club will take part in the Champions League next season as well as the revamped FIFA Club World Cup in the summer of 2025, which are all helpful in increasing the club’s global exposure and appeal.