Amalgamated Holdings Limited (ASX: AHD) owns and operates cinemas, hotels, resorts and entertainment assets. It also possesses a significant property portfolio, including the famous State Theatre in Sydney. First-half profits declined by 2.4% mainly due to poor snow conditions severely affecting returns from the Thredbo Alpine Resort and lacklustre results from the box office (Amalgamated is the ninth largest cinema exhibitor in the world; operating in Australia, Fiji, Germany and New Zealand).
Against this the hotel division performed well, especially the edgy QT Hotels and the established Rydges brands. This division continues to gain traction and is a significant growth driver for the group. Earnings per share for 2014 can be expected to come in around 53c with a fully franked dividend of 42c – at current prices ($8.50) Amalgamated Holdings appeals as a solid well capitalised investment with an improving growth outlook.
Ardent Leisure Group (ASX: AAD) owns and operates theme parks, bowling centres, fitness gyms, marinas and ancillary tourism assets.
The fastest growing division in Ardent Leisure’s asset portfolio is the Texas based Main Event, promoted as ‘family entertainment centres’. Now responsible for 15% of group earnings, Main Event has an operating margin of 34%. There are now 13 centres – 12 in Texas, one in Arizona. Plans are underway to open additional centres in Georgia and Oklahoma within the next two years. Comprising ten pin bowling, games arcades, laser tag activities, full service restaurants plus additional food and drink facilities; these centres have caught on and continuing strong growth is anticipated.
Overall growth for Ardent Leisure will come from increases in both domestic and international tourism. At $2.30, Ardent is selling at a 2014 price-earnings ratio of 13 and a yield of 6%.
Sealink Travel Group Ltd (ASX: SLK) owns and operates a diverse range of tourism and marine transport vessels. With two brands (Captain Cook & Sealink) 55% of revenues relate to tourism and 45% to freight and commuter services. The company has established a strong presence on Sydney Harbour with cruise boats and some ferry services. It also operates in South Australia, Queensland and the Northern Territory (Darwin).
With revenue growing at a compound 13.2%pa over the past 10 years, the recently listed Sealink looks well placed to continue this trend for some years to come.
At $1.80 Sealink is selling at 13 times projected 2014 earnings and a fully franked yield of 4.5%. Interest cover is a comfortable 7.4; and the company has used funds raised by the share issue to invest further in capital facilities and new stock.
All three companies can be expected to beat general market growth rates over the next few years and provide well structured opportunities for exposure to one of the few areas of the domestic economy with an increasingly positive outlook.