The theme park business continues to recover, with revenues for the second half up 30% on the previous corresponding period. For the full year, revenue will be up 70% and up 25% from pre-covid levels.

Shares up 13% on the news (although coming off a multi-year low)

The business has loads of cash following the sale of Main Event -- about $141m. So while the market cap seems expensive relative to revenues ($213 vs $84, respectively), things look a lot better on an enterprise value basis (currently at $72m). They also own a lot of land.

Bear in mind that a good chunk of cash is flagged for future development. Also, this is a business that is very much dependent on discretionary spending. In fact, things have been moderating since the first half though, with management echoing the sentiment of others in the discretionary retail space:

As a high fixed cost business, profits can really move around a lot. In 2016 -- their peak for theme parks, and before the tragic accident at Dreamworld -- the EBITDA margin was a massive 33%. Ever since, even on an adjusted or normalised basis, it's been very uninspiring (usually negative from what i can see).

So this is a bit of a turnaround play. Can they get a good return on investment with their spend on Theme parks? Can they ride out any short-term economic headwinds? Probably, but it's too tricky for me.

Today's update is here.

In response to the below straws I thought it'd be worth posting this (from the AFR today):

M&A arb funds run the ruler on Ardent Leisure’s sell down returns

May 23, 2022 – 10.55am

“What am I missing here?” asked the Barrenjoey sales traders after they were steered toward the Ardent Leisure share price, which closed last week at $1.24.

Ardent’s sale of its US business, Main Event, had just been given the all clear by antitrust regulators, and the share price would suggest the market’s ascribing almost no value to the company’s Dreamworld business, either as a going concern or in wind down.

On Monday morning, the stock was even lower at $1.23.

The trading has puzzled analysts, while putting it on the radar of opportunists and arbitrage funds.

To recap, Ardent (and fellow Main Event owner Red Bird Capital Partners) have secured $US835 million for their business from American trade player David &Buster. Ardent’s slice of the proceeds are $US487 million.

After anti-trust clearance, all that is remaining is the formality of the shareholder vote.

But that formality doesn’t appear to be reflected in the share price. The Main Event sale alone is set to net Ardent shareholders a 90¢ distribution and a 31¢ cash retention.

In other words, a $1.21 total return for each share looks on the cards.

The 2¢ residual is then effectively the residual value ascribed to the Dreamworld theme park.

Admittedly, Dreamworld has had its troubles, including a tragic accident in 2016and then a slump in ticket sales during the pandemic. But 3¢ does not computewith Dreamworld’s got 57 hectares of land.

Barrenjoey analyst Nick McGarrigle says the Dreamworld land alone is worth at least 23¢ a share while the business is probably worth 83¢ a share if a $40 million EBITDA can be achieved (based on a 10 times multiple).

The bottom line for arb funds is that Ardent Leisure costs $1.24 a share when on paper it could be worth $1.44 to $2, on conservative estimates.

So, like Barrenjoey asked, what are we missing here? Well it looks like either an easy and obvious trade, or a potentially interesting break up play.

@Rhett - On a recent last minute family trip to the Gold Coast and Cairns we went to Dream World (Not our first visit). I was very disappointed in the choice and quality of rides and attractions available. I understand that a lot of revenue comes from the USA,.

Apart from Taipan, Giant Drop and Sky Voyager Ride , Not much else in my opinion. They are going to have to put some real effort in to keep up with the other parks,, especially SeaWorld, who have created Atlantis a new Island with rides.

I have to agree - Not sure what people are expecting moving forward.

Disc - Not held.