Original-Research: DEAG Deutsche Entertainment AG - von Montega AG
Einstufung von Montega AG zu DEAG Deutsche Entertainment AG
Unternehmen: DEAG Deutsche Entertainment AG ISIN: DE000A0Z23G6
Anlass der Studie: Update Empfehlung: Buy seit: 03.12.2019 Kursziel: 6.00 Kursziel auf Sicht von: 12 months Letzte Ratingänderung: - Analyst: Henrik Markmann
DEAG coming closer to achieving annual goals after good Q3 figures
At the end of last week, DEAG published 9M figures and confirmed its annual goals following the positive operating development in Q3.
Sales growth of approx. 70% yoy: As part of its H1 reporting, DEAG had already guided for a sales level of EUR 55m in Q3 due to a shift in revenue caused by a couple of major events (Ed Sheeran, Böhse Onkelz amongst others). Generating Q3 sales of EUR 59.2m (+69.7% yoy) the company has even been able to slightly exceed this guidance. Although DEAG's 9M sales still fall short of the prior-year basis (-19.5% yoy), management expects a strong final quarter based on the forthcoming high number of events and massive advance booking.
Significant margin improvement continues: EBITDA has improved significantly in Q3 from EUR 0.9m to EUR 4.9m. We believe this can be put down to an increasing focus on higher-margin events and a growing share of tickets sold via the company's own MyTicket ticketing platform. Furthermore, DEAG is expected to have effectively reduced the platform's cost base thanks to the cooperation with SecuTix that started early in Q3.
Since some events of the new shareholdings have developed successfully, but the existing tax-loss carry-forwards included in consolidation cannot be offset to some extent, tax expenses have increased substantially in Q3 (EUR 1.4m vs. EUR 0.1m yoy). However, net income prior to minorities still has increased significantly from EUR -0.6m in the previous year to now EUR 1.0m. Driven by the good development of some majority stakes, however, minorities have increased significantly as well (EUR 2.2m vs. EUR 0.2m yoy). For this reason, net income after minorities is EUR -1.2m which is below the prior-year basis (EUR -0.8m). On the other hand, investment pay-outs were lower than we had anticipated (EUR -6.2m vs. MONe EUR -10.7m) which had a positive impact on the cash flow. We have revised our valuation model on the basis of the slight changes in the group structure for 2019 et seq.
Promising event pipeline in the most important final quarter: The management board has confirmed the annual goals ('sales and EBITDA moderately above the previous year'). This implies another strong sales growth of some 70% yoy for Q4. Numerous shows (Disney on Ice or Dieter Bohlen's tour amongst others) are likely to have a positive impact on revenue in Q4. Furthermore, DEAG's high-margin 'Christmas Garden' is represented in six locations this year (2018: 3). As most of the Christmas Garden tickets as well as a rising share of the concert tickets should be sold through the company's own MyTicket ticketing platform, profitability is expected to be high in Q4 as well. That said, our former expectations appeared to have been somewhat overestimated, especially in terms of the top line.
Conclusion: We believe the good Q3 figures combined with the high number of events taking place in Q4 illustrate that DEAG is likely make operational progress in the final quarter as well. After having adjusted our estimates and rolled over the DCF model we confirm our 'buy' rating and our price target of EUR 6.00.
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