03.06.2020 DEAG Deutsche Entertainment AG DE000A0Z23G6
Original-Research: DEAG Deutsche Entertainment AG (von Montega AG): Buy
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
DEAG had a good start to crisis year 2020
DEAG recently has published its Q1 report reflecting a good start to the current financial year despite initial effects caused by the corona pandemic.
Sales slightly above our expectations: Revenues were slightly up by 2.7% to EUR 262m in Q1/20 and thus exceeded our expectations (MONe: EUR 24.5m) despite initial negative effects caused by the “corona crisis”. Formats such as “Disney on Ice” or the Christmas Gardens should have seen a particularly pleasing development in the first quarter. “Disney on Ice”, for instance, was additionally performed for the first time in Düsseldorf, Stuttgart and Geneva and the Christmas Garden sites were doubled to six. However, DEAG also hosted successful events in the rock/pop as well as classics & jazz genres with well-known artists such as Papa Roach or Till Brönner.
In terms of earnings, the company successfully increased its gross margin to 26.9% (PY: 25.5%) and its EBITDA to EUR 1.2m (PY: EUR 1.0m). On the one hand, this reflects the success of the higher-margin own events, such as the Christmas Gardens. On the other hand, DEAG increasingly benefits from the gradual expansion of its own “MyTicket” ticketing platform. As a result of higher D&A due to right-of-use assets for leases (EUR 1.9m vs. EUR 1.0m in the previous year) with interest expenses being at the prior-year level (EUR 1.0m) net earnings of EUR -1.8m are lower than in the previous year (EUR -1.4m). Liquid funds amounted to EUR 50.8m at the end of Q1/20. Thanks to a smooth settlement by the pandemic insurance so far, DEAG has already received funds in the medium single-digit million euros. Additionally, the company has free credit lines of EUR 9.2m, which all in all provides the company with a comfortable financial framework of EUR 60.0m.
New event formats compensate for sales losses, at least in part: As DEAG cannot evade the current prohibition of events and gatherings, management reacted quickly and has offered alternative event formats such as “BW-Kulturwasen” in Stuttgart or “Stage Drive Kulturbühne“ in Frankfurt. Concerts, readings, or films hosted as part of these events are taking place in drive-in cinemas. However, they should have a significantly smaller attendance. We have lowered our forecasts once again as we no longer assume that some of the major events scheduled for September and October will be taking place as initially planned given the development of the last weeks. For instance, this year’s Böhse Onkelz tour is unlikely to take place as scheduled, which should result in temporary sales losses for DEAG. Based on the existing insurance coverage, however, this should not have any adverse effect on earnings. We still assume that important events in Q4/20, such as the Christmas Gardens, may take place and that advance sales for events in 2021 will normalise.
Conclusion: DEAG had a good start to the crisis year, taking account of circumstances. Based on the comfortable capital resources, the insurance cover in place until the end of this year, as well as the good prospects for the final quarter we consider DEAG to be well prepared to withstand the adversities of the corona pandemic. We have slightly reduced our price target to EUR 5.80 (previously EUR 6.00) due to revised forecasts and confirm our buy rating.
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Medien (Film, Musik) , A0Z23G , LOUD , XETR:ERMK