Ardent Leisure Group (ASX: AAD) owns and operates leisure assets in Australia and the United States. There are five divisions in all; each with a different profile.
Bowling
With brands such as AMF and Kingpin, ten pin bowling is a bit of a problem child for the group. Although profitable, trading in this division remains lacklustre and moves are underway to broaden this activity's appeal – Townsville's Kingpin is an example of what's in store. Bowling contributes 15% of group EBITDA (earnings before interest, tax, depreciation and amortisation).
Health Clubs
Ardent entered this field in 2008, purchasing 18 clubs. Through both acquisitions and organic growth the number of sites has grown to 68, and this division contributes 27% of group EBITDA. Health clubs enjoy excellent margins and the acquisition of the Australia & New Zealand rights for the 'body shaping' weight loss program Hypoxi indicate additional value adding services which can be offered.
Marinas
The well located string of marinas provide a steady annuity style income for the group (8% of EBITDA) and incremental growth can be expected from this division.
Main Event
The rock star in the group is the US-based Main Event – marketed as 'one stop' entertainment centres these facilities cater for all demographics and offer a wide range of activities including bowling, laser games, rock climbing and a large variety of advanced video games. Food and beverage services range from plain and simple to full service restaurants. Very affordable, average spend per head is US$20.
At present there are 13 Main Event sites in operation (Texas & Arizona) with a further six planned by the end of FY2015. Average sites cost US$7m to develop and the payback period is 3.5 years. Currently contributing 15% of group EBITDA Main Event is a fast growing and highly lucrative division.
Gold Coast Theme Parks / Attractions
Ever popular Dreamworld was again voted Queensland's best major tourist attraction. Dreamworld and kid sister WhiteWater aqua park continue to perform (35% of group EBITDA) and further improvement can be expected with the Gold Coast experiencing a tourism and visitor rebound. Included in this division is the Sky Point attraction which is a nice little earner.
Currently selling at $2.59, Ardent Leisure is fully valued on short-term prospects. However the medium and longer term outlook is very positive for this business and it deserves a star rating below $2.30.
