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Gold Coast Tourism resurgence suggests positive outlook for Ardent Leisure businesses
Leading analysts Citi have predicted that multi-sector leisure business Ardent Leisure will benefit from a resurgence in Gold Coast tourism, further roll-out of its US family entertainment centre business and a turnaround in the performance of its Goodlife Health Clubs in its 2015/16 financial year figures to be released on 24th August.
Anticipating a net profit after tax of $56.2 million for the year, Citi predict that Ardent’s share price, which has recovered almost 18% in the last six months, will enjoy further growth.
As well as Goodlife, Ardent operates the Main Event family entertainment centre (FEC) businesses in the United States, AMF and Kingpin Bowling; d'Albora Marinas; and the Dreamworld, WhiteWater World & SkyPoint theme parks and attractions on the Gold Coast.
Citi Research analyst Sam Teeger told the Australian Financial Review “we expect Ardent's share price to increase on accelerating Main Event like-for-like momentum, despite questions surrounding sustainable margins
"Ardent should also benefit from the Gold Coast Tourism resurgence."
Citi noted that there was 51% less rainfall on the Gold Coast in the first half of this calendar year compared with first half of 2015 and that Gold Coast airport traffic was up 10% over the same time frame.
As a result, it expects Ardent’s Gold Coast attractions to report attendance growth of 13% compared with the previous corresponding period.
However Citi said there was some risk to margins given the theme park's earnings before interest depreciation and amortisation and because of increased labour costs.
For Goodlife, Citi predict a small rise in earning based upon pressures on membership pricing having “stabilised”.
However, Citi highlight that Western Australia (where 20% of Goodlife clubs are located) appears to be “the most challenged state” with prices falling throughout the current year.
Citi’s analysis states “Ardent recognised $25 million of goodwill on the Fitness First Western Australia acquisition and given the reduction in pricing in Western Australia, we see potential for a goodwill impairment.”
Citi also predict that the findings of Ardent’s strategic review of its fitness division will be released along with the 2015/16 figures.
Citi also expect an update on Ardent’s planned sale of its d'Albora Marinas division, announced in March.
Media reports suggest negotiations are now well advanced with three parties but that the sale could be impacted by the cost of cleaning up an oil spill at Sydney’s Rushcutters Bay in May this year.
Images: Tiger Island at Dreamworld (top) and the d’Albora Marinas' property at Akuna Bay (below).
31st March 2016 - ARDENT LEISURE LOOKS TO SELL MARINAS DIVISION
18th February 2016 - ARDENT LEISURE RECORDS 20% PROFIT RISE BACKED BY IMPROVED FEC AND THEME PARK VISITS
21st August 2015 - ARDENT LEISURE RECORDS PROFIT DIP BUT LOOKS AT FEC EXPANSION
22nd July 2015 - ARDENT LEISURE PLANS INTERNATIONAL EXPANSION
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