Event Hospitality & Entertainment Ltd (ASX: EVT) shares are trading flat at $13.36 even after the hotels and cinemas business flagged a strong start to its fiscal 2020 at its AGM today.
According to management popular new movie releases including the Lion King and Spiderman: Far From Home helped the cinemas division deliver a strong first quarter, with the hotels business largely trading flat due to a “challenging” market.
Overall group profit before tax for the for Q1 2020 climbed 9.2% on the prior corresponding period.
Over fiscal 2019 group revenue from continuing operation climbed 2% to $998 million with normalised profit down 6.7% to $159 million. This translated into flat year-on-year dividends of a fully franked 52 cents per share on earnings of 69.6 cents per share.
The group has managed to lift its total annual dividends from 10 cents per share in 2001 to the current 52 cents per share. Notably, this has not been achieved with a debt blowout.
Given it has cash on hand of $77 million and total debt of $377 million the balance sheet is in reasonable shape for a group boasting substantial bricks-and-mortar assets.
It also has big plans to develop significant prime property assets on Sydney’s George Street including a hotel extension, apartments, retail space and a major commercial office tower. Funding options for the development are reportedly under review with the group looking for a commercial partner to complete the major office tower.
On a trailing basis shares change hands for 19.1x earnings with a fully franked 3.9% dividend yield.
Given the track record of steady growth, quality assets, and leverage to Australia’s tourism sector I think dividend seeking investors could do worse than owning shares in this business. If they got much cheaper I’d be happy to pick some up myself.
Of course if you’re bearish on the outlook for cinemas given the rise of home entertainment and streaming services you might want to give it a miss. As that’s what makes a market.
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You can find Tom on Twitter @tommyr345
The Motley Fool Australia owns shares of and has recommended Flight Centre Travel Group Limited. The Motley Fool Australia owns shares of Event Hospitality & Entertainment. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.