Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<div>
<p>On the 18 May, Aussie theme parks and movie theater operator <a href="https://www.smartkarma.com/entities/village-roadshow-ltd" target="_blank" data-smartkarma-citation="entities:7836:1" rel="noopener">Village Roadshow (VRL AU)</a> entered into <a href="https://www.asx.com.au/asxpdf/20200518/pdf/44hx6rjz13vp2b.pdf" target="_blank" rel="noopener">exclusive talks</a> with BGH Capital, which was followed on the 7 August with the <a href="https://www.asx.com.au/asxpdf/20200807/pdf/44l8s8vg0qgjdy.pdf" target="_blank" rel="noopener">entering</a> into an Implementation Agreement, such that VRL shareholders would receive, under Structure A, up to A$2.45/share comprising A$2.20/share (A$2.10/share under Structure B) plus an additional A$0.25/share upon the re-opening of theme parks and cinemas, and Queensland's border being open to any person from NSW and Victoria. </p>
<p>At the time, I viewed the offer as being overly wrought, highly opportunistic, and heavily caveated, enabling the key shareholders to remain largely invested in the back-end; and failing that option (Structure A) - penalizing minorities via a lower cash option under Structure B.</p>
<p>Mittleman Investments agreed, and <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02291037-3A552048?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">said</a> it intends to vote its shares against both alternatives. Spheria Asset Management <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02307851-3A555222?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">chimed</a> in early this month.</p>
</div>
<div>
<h3>A Recent Timeline of Events</h3>
</div>
<div>
<div>
<table class="table table-striped">
<tbody>
<tr>
<td style="width: 93.7143px;">
<h3>Date</h3>
</td>
<td style="width: 610.286px;">
<h3>Date in the Date</h3>
</td>
</tr>
<tr>
<td style="width: 93.7143px;">29-Aug-19</td>
<td style="width: 610.286px;">
<p>Release of  <a href="https://www.asx.com.au/asxpdf/20190829/pdf/44800hyl7gkz2s.pdf" target="_blank" rel="noopener">FY19</a>  results. VRL reported an underlying profit of A$20.6mn in against a loss of $7.3mn the previous year. The company declared a return to dividends with a fully franked dividend of A$0.05/share. At the time of these full-year results, Burke said the key issues with John had largely been addressed.</p>
</td>
</tr>
<tr>
<td style="width: 93.7143px;">19-Dec-19</td>
<td style="width: 610.286px;">Pacific Equity Partners <a href="https://www.asx.com.au/asxpdf/20191219/pdf/44cqw7hyn865wn.pdf" target="_blank" rel="noopener">tabled</a> a non-binding Offer at A$3.90/share, a 21.9% premium to last close, by way of a Scheme. PEP has also agreed to buy a 19% stake (at $3.90/share) from VRC, which would indicate Burke and the brothers are on the same page.<br><br>
<p>This is a <a href="https://www.asx.com.au/asxpdf/20191219/pdf/44cqwl4t5yh94r.pdf" target="_blank" rel="noopener">call option</a> on 19% of shares out - or Relevant Shares - between PEP and VRC. If an alternative offer is recommended by Village's board, the call option can be exercised. Voting remains with VRC until the Relevant Shares are exercised.</p>
</td>
</tr>
<tr>
<td style="width: 93.7143px;">23-Jan-20</td>
<td style="width: 610.286px;">VRL received a non-binding, indicative <a href="https://www.asx.com.au/asxpdf/20200124/pdf/44dh80xy1977ll.pdf" target="_blank" rel="noopener">offer</a> from BGH Capital of $4.00/share, a 25% premium to last close, and a small premium to PEP's $3.90/share offer the previous month.</td>
</tr>
<tr>
<td style="width: 93.7143px;">19-Mar-20</td>
<td style="width: 610.286px;">
<p>VRL <a href="https://www.asx.com.au/asxpdf/20200319/pdf/44g6ftp3syn8tb.pdf" target="_blank" rel="noopener">said</a> they continue to assist PEP and BGH with their respective due diligence. Exposed to cinemas and theme parks amidst the virus - VLR was down 75% from its recent high at this time.</p>
</td>
</tr>
<tr>
<td style="width: 93.7143px;">18-May-20</td>
<td style="width: 610.286px;">
<a href="https://www.asx.com.au/asxpdf/20200518/pdf/44hx6rjz13vp2b.pdf" target="_blank" rel="noopener">Enters</a> into exclusive discussions with BGH.</td>
</tr>
<tr>
<td style="width: 93.7143px;">16-Jun - 5-Aug</td>
<td style="width: 610.286px;">Various announcements extending the exclusivity agreement with BGH</td>
</tr>
<tr>
<td style="width: 93.7143px;">7-Aug-20</td>
<td style="width: 610.286px;">
<a href="https://www.asx.com.au/asxpdf/20200807/pdf/44l8s8vg0qgjdy.pdf" target="_blank" rel="noopener">Entering</a> into an Implementation Agreement with BGH. </td>
</tr>
<tr>
<td style="width: 93.7143px;">28-Aug-20</td>
<td style="width: 610.286px;"><a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02273676-3A548632?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">FY20 results</a></td>
</tr>
<tr>
<td style="width: 93.7143px;">25-Sep-20</td>
<td style="width: 610.286px;">"<a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02285343-3A551068?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">Film Deferral Event</a>" under the Implementation Agreement - no A$0.08/share additional payment.</td>
</tr>
<tr>
<td style="width: 93.7143px;">2-Oct-20</td>
<td style="width: 610.286px;">Mittleman bumps to <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02290462-3A551960?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">10.09%</a>
</td>
</tr>
<tr>
<td style="width: 93.7143px;">7-Oct-20</td>
<td style="width: 610.286px;">Mittleman says it will vote <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02291037-3A552048?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">against</a>
</td>
</tr>
<tr>
<td style="width: 93.7143px;">8-Oct-20</td>
<td style="width: 610.286px;">Spheria, having dipped below 5% back on xx, now has <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02292760-3A552377?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">6.20%</a>.</td>
</tr>
<tr>
<td style="width: 93.7143px;">9-Oct-20</td>
<td style="width: 610.286px;">Scheme Meeting <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02292036-3A552242?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">confirmed</a> for the 26 November</td>
</tr>
<tr>
<td style="width: 93.7143px;">12-Oct-20</td>
<td style="width: 610.286px;">Scheme Booklet <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02292758-3A552376?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">lodged</a> with ASIC and expected to be despatched on or before the 21 October, and the Scheme Meetings tentatively set for the 26 November.</td>
</tr>
<tr>
<td style="width: 93.7143px;">28-Oct-20</td>
<td style="width: 610.286px;">Spheria bumps to <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02302992-3A554387?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">7.80%</a>
</td>
</tr>
<tr>
<td style="width: 93.7143px;">4-Nov-20</td>
<td style="width: 610.286px;">Mittleman bumps to <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02305802-3A554879?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">11.24%</a>
</td>
</tr>
<tr>
<td style="width: 93.7143px;">9-Nov-20</td>
<td style="width: 610.286px;">Uplift of A$0.12/share <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02306239-3A554956?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">locked in</a>
</td>
</tr>
<tr>
<td style="width: 93.7143px;">10-Nov-20</td>
<td style="width: 610.286px;">Mittleman bumps to <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02308127-3A555266?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">12.87%</a>
</td>
</tr>
<tr>
<td style="width: 93.7143px;">12-Nov-20</td>
<td style="width: 610.286px;">Spheria says it will vote <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02307851-3A555222?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">against</a>
</td>
</tr>
<tr>
<td style="width: 93.7143px;">12-Nov-20</td>
<td style="width: 610.286px;">Mittleman bumps to <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02311114-3A555880?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">14.34%</a>
</td>
</tr>
</tbody>
</table>
</div>
</div>
<div>
<div style="text-align: left;" class="content-caption">Source: ASX</div>
</div>
<h3>The New News</h3>
<div></div>
<p>This morning, VRL <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02312095-3A556080?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">announced</a> it had agreed with BGH that the terms are now A$3.00 under the Structure A Scheme and A$2.95/share under the Structure B Scheme, as had been rumoured last Friday. <br><br>Spheria now intends to vote in favour of both A and B. No word from Mittleman as yet.<br><br>The Scheme Meeting will now expected to be held on the 7 December, subject to Court approval.</p>
<div>
<p>More below the fold.</p>
</div>
<div>
<p></p>
</div>


On the 18 May, Aussie theme parks and movie theater operator Village Roadshow (VRL AU) entered into exclusive talks with BGH Capital, which was followed on the 7 August with the entering into an Implementation Agreement, such that VRL shareholders would receive, under Structure A, up to A$2.45/share comprising A$2.20/share (A$2.10/share under Structure B) plus an additional A$0.25/share upon the re-opening of theme parks and cinemas, and Queensland's border being open to any person from NSW and Victoria. 
At the time, I viewed the offer as being overly wrought, highly opportunistic, and heavily caveated, enabling the key shareholders to remain largely invested in the back-end; and failing that option (Structure A) - penalizing minorities via a lower cash option under Structure B.
Mittleman Investments agreed, and said it intends to vote its shares against both alternatives. Spheria Asset Management chimed in early this month.


A Recent Timeline of Events







Date


Date in the Date



29-Aug-19

Release of  FY19  results. VRL reported an underlying profit of A$20.6mn in against a loss of $7.3mn the previous year. The company declared a return to dividends with a fully franked dividend of A$0.05/share. At the time of these full-year results, Burke said the key issues with John had largely been addressed.



19-Dec-19
Pacific Equity Partners tabled a non-binding Offer at A$3.90/share, a 21.9% premium to last close, by way of a Scheme. PEP has also agreed to buy a 19% stake (at $3.90/share) from VRC, which would indicate Burke and the brothers are on the same page.  
This is a call option on 19% of shares out - or Relevant Shares - between PEP and VRC. If an alternative offer is recommended by Village's board, the call option can be exercised. Voting remains with VRC until the Relevant Shares are exercised.



23-Jan-20
VRL received a non-binding, indicative offer from BGH Capital of $4.00/share, a 25% premium to last close, and a small premium to PEP's $3.90/share offer the previous month.


19-Mar-20

VRL said they continue to assist PEP and BGH with their respective due diligence. Exposed to cinemas and theme parks amidst the virus - VLR was down 75% from its recent high at this time.



18-May-20

Enters into exclusive discussions with BGH.


16-Jun - 5-Aug
Various announcements extending the exclusivity agreement with BGH


7-Aug-20

Entering into an Implementation Agreement with BGH. 


28-Aug-20
FY20 results


25-Sep-20
"Film Deferral Event" under the Implementation Agreement - no A$0.08/share additional payment.


2-Oct-20
Mittleman bumps to 10.09%



7-Oct-20
Mittleman says it will vote against



8-Oct-20
Spheria, having dipped below 5% back on xx, now has 6.20%.


9-Oct-20
Scheme Meeting confirmed for the 26 November


12-Oct-20
Scheme Booklet lodged with ASIC and expected to be despatched on or before the 21 October, and the Scheme Meetings tentatively set for the 26 November.


28-Oct-20
Spheria bumps to 7.80%



4-Nov-20
Mittleman bumps to 11.24%



9-Nov-20
Uplift of A$0.12/share locked in



10-Nov-20
Mittleman bumps to 12.87%



12-Nov-20
Spheria says it will vote against



12-Nov-20
Mittleman bumps to 14.34%







Source: ASX

The New News

This morning, VRL announced it had agreed with BGH that the terms are now A$3.00 under the Structure A Scheme and A$2.95/share under the Structure B Scheme, as had been rumoured last Friday.   Spheria now intends to vote in favour of both A and B. No word from Mittleman as yet.  The Scheme Meeting will now expected to be held on the 7 December, subject to Court approval.

More below the fold.





Village Roadshow: Rollercoaster Economics

Index Rebal Trades & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Index Rebal Trades & Special Situations

<p>On June 1st, <a href="https://www.smartkarma.com/entities/cineplex-inc" target="_blank" data-smartkarma-citation="entities:25216:1" rel="noopener">Cineplex Inc (CGX CN)</a> provided <a href="http://irfiles.cineplex.com/Attachments/NewItems/Cineplex%20ICA%20Extension%20Release%20June%201%20FINAL_20200601121829_0.pdf" target="_blank" rel="noopener">an update on the status of Investment Canada review</a> in connection to the Cineplex-Cineworld Deal: </p><blockquote>
<p>Cineworld and Cineplex are obligated to use reasonable best efforts to obtain the requisite ICA Approval so as to enable the closing of the Transaction to occur as soon as reasonably practicable (and in any event <strong>no later than June 30, 2020</strong> (the “Outside Date”)). Receipt of the ICA Approval is a condition to closing the Transaction.</p>
<p>The process to obtain the approvals under the Investment Canada Act is ongoing and the period for review of the Transaction has been extended to <strong>June 15, 2020</strong>.</p>
</blockquote><p>With less than a month to the <em>Outside Date</em> (30th June), the Deal remains conditional mainly on the ICA Approval, fulfilment of certain covenants in the arrangement agreement (<a href="https://www.sedar.com/CheckCode.do;jsessionid=0000d67H30V7XDVByUglDY_dfw9:188setvlh" target="_blank" rel="noopener">SEDAR link</a>), and Cineplex maintaining its debt level under C$725mn (the "<em>Debt Condition</em>"). </p><p>In my previous insight, <a href="https://www.smartkarma.com/insights/cineplex-is-this-deal-broken" target="_blank" data-smartkarma-citation="insights:37588" rel="noopener">Cineplex: Is This Deal Broken?</a>, I discussed several ways of how this deal could potentially collapse. </p><p>However, the Acquirer <a href="https://www.smartkarma.com/entities/cineworld-group-plc" target="_blank" data-smartkarma-citation="entities:21872:1" rel="noopener">Cineworld (CINE LN)</a> officially remains committed to completing this Deal at least as of a month ago. Here is what Cineplex's update on May 7th said:  </p><blockquote><p><strong> Cineworld has advised Cineplex that it remains committed</strong> to closing the Transaction on or prior to the outside date of June 30, 2020 (the “Outside Date”). However, there can be no assurance that the conditions to closing the Transaction will be satisfied by the Outside Date.</p></blockquote><p><strong>So can this Deal still go through? IF it does not go through what could possibly happen to Cineplex's share price? </strong></p><p>We provide our opinions to these questions below the fold. </p>

On June 1st, Cineplex Inc (CGX CN) provided an update on the status of Investment Canada review in connection to the Cineplex-Cineworld Deal: 
Cineworld and Cineplex are obligated to use reasonable best efforts to obtain the requisite ICA Approval so as to enable the closing of the Transaction to occur as soon as reasonably practicable (and in any event no later than June 30, 2020 (the “Outside Date”)). Receipt of the ICA Approval is a condition to closing the Transaction.
The process to obtain the approvals under the Investment Canada Act is ongoing and the period for review of the Transaction has been extended to June 15, 2020.
With less than a month to the Outside Date (30th June), the Deal remains conditional mainly on the ICA Approval, fulfilment of certain covenants in the arrangement agreement (SEDAR link), and Cineplex maintaining its debt level under C$725mn (the "Debt Condition"). In my previous insight, Cineplex: Is This Deal Broken?, I discussed several ways of how this deal could potentially collapse. However, the Acquirer Cineworld (CINE LN) officially remains committed to completing this Deal at least as of a month ago. Here is what Cineplex's update on May 7th said:   Cineworld has advised Cineplex that it remains committed to closing the Transaction on or prior to the outside date of June 30, 2020 (the “Outside Date”). However, there can be no assurance that the conditions to closing the Transaction will be satisfied by the Outside Date.So can this Deal still go through? IF it does not go through what could possibly happen to Cineplex's share price? We provide our opinions to these questions below the fold. 

Leading Independent Investment Research, Morningstar, Inc.

Morningstar

Leading Independent Investment Research

Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. We offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors. 

Morningstar provides data on more than 500,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 16 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries, with more than $180 billion in assets under advisement or management as of June 30, 2015. We have operations in 27 countries.

Download the Morningstar Fact Sheet : http://corporate.morningstar.com/US/documents/MarketingFactSheets/AboutMorningstarFactsheet.pdf

Thematic (Sector/Industry)

<h2>Executive Summary</h2><p>Australia has been a key beneficiary of China's rising middle-income class, with inbound tourists from the country growing at double-digit levels and showing no signs of slowing. Domestic leisure and travel-related companies are well-placed to take advantage of this trend longer term. However, investors need to beware what China giveth, it can easily taketh away. Any leverage to the China thematic could abruptly reverse to the downside, due to potential structural brakes to its economic growth and impact of periodic political events.</p><h2>Key Takeaways</h2><ul><li>Chinese tourists to Australia have grown at a CAGR of 17% over the past five years, driven by perceived safety relative to other destinations, pristine nature, a low Australian dollar and the recently-implemented open skies agreement between the two countries. The outlook appears equally rosy, with double-digit growth likely to be sustained, coupled with rising spend per visitor from the expanding Chinese middle class.</li><li>While current revenue leverage to this thematic is relatively low among Australian leisure and travel companies, multiple rerating often occurs ahead of any meaningful financial impact. To this end, we highlight <a href="https://www.smartkarma.com/entities/677" target="_blank" data-smartkarma-citation="entities:677:1">Qantas Airways Ltd (QAN AU)</a>, <a href="https://www.smartkarma.com/entities/20978" target="_blank" data-smartkarma-citation="entities:20978:1">Event Hospitality and Entertainment (EVT AU)</a>, and <a href="https://www.smartkarma.com/entities/7836" target="_blank" data-smartkarma-citation="entities:7836:1">Village Roadshow Ltd (VRL AU)</a> as the likely long-term beneficiaries of Chinese inbound growth and worth considering when their shares show sufficient discount to our fair value estimates.</li><li>However, leverage to China cuts both ways. There are risks to the country's long-term economic outlook, with Morningstar's China Economic Committee recently highlighting depleting sources of productivity gains and the challenges of transitioning from middle-income to high-income as key threats. Political events could also derail any China-driven growth, as can be in recent times attested by the South Korean and Taiwanese tourism industry, Macau gambling operators, and Australian high-roller casinos.</li><li>These macro issues are indeed partly why our fair value estimates for Australian leisure and travel companies have not yet fully factored in the potential "China upside."</li></ul><p><em>Analysts: Brian Han and Adam Fleck</em></p>

Executive SummaryAustralia has been a key beneficiary of China's rising middle-income class, with inbound tourists from the country growing at double-digit levels and showing no signs of slowing. Domestic leisure and travel-related companies are well-placed to take advantage of this trend longer term. However, investors need to beware what China giveth, it can easily taketh away. Any leverage to the China thematic could abruptly reverse to the downside, due to potential structural brakes to its economic growth and impact of periodic political events.Key TakeawaysChinese tourists to Australia have grown at a CAGR of 17% over the past five years, driven by perceived safety relative to other destinations, pristine nature, a low Australian dollar and the recently-implemented open skies agreement between the two countries. The outlook appears equally rosy, with double-digit growth likely to be sustained, coupled with rising spend per visitor from the expanding Chinese middle class.While current revenue leverage to this thematic is relatively low among Australian leisure and travel companies, multiple rerating often occurs ahead of any meaningful financial impact. To this end, we highlight Qantas Airways Ltd (QAN AU), Event Hospitality and Entertainment (EVT AU), and Village Roadshow Ltd (VRL AU) as the likely long-term beneficiaries of Chinese inbound growth and worth considering when their shares show sufficient discount to our fair value estimates.However, leverage to China cuts both ways. There are risks to the country's long-term economic outlook, with Morningstar's China Economic Committee recently highlighting depleting sources of productivity gains and the challenges of transitioning from middle-income to high-income as key threats. Political events could also derail any China-driven growth, as can be in recent times attested by the South Korean and Taiwanese tourism industry, Macau gambling operators, and Australian high-roller casinos.These macro issues are indeed partly why our fair value estimates for Australian leisure and travel companies have not yet fully factored in the potential "China upside."Analysts: Brian Han and Adam Fleck

Leverage to Chinese Tourists Can Be Sweet and Sour: Implications on Australian Leisure and Travel

<p>Leisure companies under our coverage endured a torrid reporting season, with average fiscal 2017 first-half EBITDA fall of 15% from a year ago. The results were mostly driven by factors specific to each group. Still, whether it is the sentiment impact of an isolated theme park tragedy, competitive intensity in the U.S. leisure market, low airfares, or film popularity, the bottom line is there are many variables beyond management's control in the industry. These factors are the very basis for our…</p>

Leisure companies under our coverage endured a torrid reporting season, with average fiscal 2017 first-half EBITDA fall of 15% from a year ago. The results were mostly driven by factors specific to each group. Still, whether it is the sentiment impact of an isolated theme park tragedy, competitive intensity in the U.S. leisure market, low airfares, or film popularity, the bottom line is there are many variables beyond management's control in the industry. These factors are the very basis for our…

Not Much Fun In Leisure; Ardent Leisure Undervalued While Event Hospitality Worth Monitoring

Director - Research, Consulting and Advisory, BondAdviser

Nicholas Yaxley

Director - Research, Consulting and Advisory

Australian bonds & fixed income research

BondAdviser

BondAdviser is the central reference point for intelligent information on Australian fixed income markets. We help you make informed decisions by providing unbiased research, transparent pricing data, analytics, portfolio tools and education.

BondAdviser has the broadest coverage of retail-accessible ASX-listed and over-the-counter Australian bonds and fixed income securities. We make it easy for you to review and compare investments before you place an order with your broker or dealer.

<p>In <a href="https://www.bondadviser.com.au/blog/the-demand-we-have-been-waiting-for" target="_blank">November 2016</a> we stated a large proportion of redemptions would be reinvested in existing corporate issues to achieve some degree of sectoral diversification away from the banks. Since then, the demand/supply imbalance has squeezed trading margins on corporate hybrids to the point where some security valuations are being stretched from a trading margin risk perspective.</p><p>Although we expect tight supply dynamics to continue and support expensive valuations, particularly for corporate listed securities, new investors should be aware of the inherent risk. For investors already holding these securities there is probably no reason to sell as scheduled corporate redemptions will continue to intensify demand in a relatively small market. We believe this situation of demand over supply will persist. However, given valuations are not reflective of risk profiles, we will be reviewing our recommendations if corporate hybrid margins continue to tighten.</p>

In November 2016 we stated a large proportion of redemptions would be reinvested in existing corporate issues to achieve some degree of sectoral diversification away from the banks. Since then, the demand/supply imbalance has squeezed trading margins on corporate hybrids to the point where some security valuations are being stretched from a trading margin risk perspective.Although we expect tight supply dynamics to continue and support expensive valuations, particularly for corporate listed securities, new investors should be aware of the inherent risk. For investors already holding these securities there is probably no reason to sell as scheduled corporate redemptions will continue to intensify demand in a relatively small market. We believe this situation of demand over supply will persist. However, given valuations are not reflective of risk profiles, we will be reviewing our recommendations if corporate hybrid margins continue to tighten.

Valuations Stretched on ASX-Listed Corporate Hybrids

Australia

Event Hospitality and Entertainment Limited owns and operates motion picture exhibition cinemas, drive-in theaters and film processing laboratories.  The Group also owns and operates the Thredbo Alpine Resort, Sydney harbor ferry services and the Feather -dale Wildlife Park along with operating hotels, resorts and restaurants.

Event Hospitality and Entertainment (EVT AU)

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Event Hospitality and Entertainment (EVT AU)

Village Roadshow: Rollercoaster Economics

This revised proposal is simpler and fairly priced - the IE had a fair value range of $2.03-$2.80/share. The question mark is over Mittleman's...

David Blennerhassett

Cineplex-Cineworld: The Final Countdown

On June 1st, Cineplex Inc (CGX CN) provided an update on the status of Investment Canada review in connection to the Cineplex-Cineworld...

Janaghan Jeyakumar, CFA

Leverage to Chinese Tourists Can Be Sweet and Sour: Implications on Australian Leisure and Travel

Executive SummaryAustralia has been a key beneficiary of China's rising middle-income class, with inbound tourists from the country growing at...

Morningstar, Inc.

Not Much Fun In Leisure; Ardent Leisure Undervalued While Event Hospitality Worth Monitoring

Leisure companies under our coverage endured a torrid reporting season, with average fiscal 2017 first-half EBITDA fall of 15% from a year ago. The...

Morningstar, Inc.

Valuations Stretched on ASX-Listed Corporate Hybrids

In November 2016 we stated a large proportion of redemptions would be reinvested in existing corporate issues to achieve some degree of sectoral...

BondAdviser

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)