Pressure All Around Village Roadshow; FVE Cut 8% to AUD 3.60 Per Share

Leading Independent Investment Research, Morningstar, Inc.

Morningstar

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Morningstar, Inc.

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Equity Bottom-Up

No-moat-rated Village Roadshow's market value has declined 10% since the release of the fiscal 2016 result in August. Some of this can be justified on the continuing poor showing from film distribution, the subdued theme parks performance and a step-up in debt. We view these factors as temporary and fully reflected in the 30% discount Village shares are trading at relative to our unchanged AUD 6.50 fair value estimate.Village shares are trading at a material discount to its leisure sector peers. Its fiscal 2017 enterprise value/EBITDA currently stands at 6.1 times, compared with 10.5 times for Ardent Leisure and 8.0 times for Event Hospitality and Entertainment. Village's fiscal P/E currently stands at 13.3 times, compared with 15.1 times for Ardent and 17.2 times for Event. We could debate until the cows come home about the relative quality of each company's business and why their multiples should be different. At the end of the day, we believe the current differential is still not justified and too stark to ignore.Analyst: Brian Han

No-moat-rated Village Roadshow's market value has declined 10% since the release of the fiscal 2016 result in August. Some of this can be justified on the continuing poor showing from film distribution, the subdued theme parks performance and a step-up in debt. We view these factors as temporary and fully reflected in the 30% discount Village shares are trading at relative to our unchanged AUD 6.50 fair value estimate.Village shares are trading at a material discount to its leisure sector peers. Its fiscal 2017 enterprise value/EBITDA currently stands at 6.1 times, compared with 10.5 times for Ardent Leisure and 8.0 times for Event Hospitality and Entertainment. Village's fiscal P/E currently stands at 13.3 times, compared with 15.1 times for Ardent and 17.2 times for Event. We could debate until the cows come home about the relative quality of each company's business and why their multiples should be different. At the end of the day, we believe the current differential is still not justified and too stark to ignore.Analyst: Brian Han

Village Roadshow Must Bank Sully, as Shares 30% Undervalued