Daily Brief Consumer: Netflix Inc, Universal Entertainment, The Walt Disney Co, paragon AG and more

• Bill Ackman’s analysis was good, but his timing was poor. Netflix subscriptions recover, but margins fall.
• The outlook for Netflix under a new leadership model is good, according to Ackman.
• Netflix stock bottomed as expected, but it was down for the first time since Ackman took over.

• The long, twisted trail of Universal Entertainment’s Okada Manila casino spinoff faces yet another legal obstacle announced last week.
• The extension of Universal’s/ 26 Capital Spac deal for one year could see the debut of the IPO during an increasingly higher growth industry revenue recovery arc.
• 26 Capital valuation of Okada at US$2.5 bill with a $10 per share offer price could run up quickly as market momentum turns positive sentiment higher.

• Record high quarterly margins at Disney’s parks and experiences would not be the silver bullet to high shareholder returns.
• Higher future margins are already priced in and with that upside appears limited, even if management executes on its current strategy.
• Disney’s business model is shaken by yet another restructuring, according to the company.

paragon appears to be progressively de-risking its investment proposition. The agreed sale of Semvox crystallises an enterprise value (EV) that highlights the depressed market cap due to the debt burden. The accelerated redemption of the entire Swiss franc (CHF) bond issue and half the Eurobond reduces debt metrics to typical industrial levels, and we expect improving cash flows to facilitate final redemption in 2027. The result is an apparently anomalous rating for paragon compared to its estimated cash valuations and peers. Assuming the disposal completes and the bonds are redeemed as anticipated, the crushed equity value of recent years should finally be relieved.