21st Sep 2022 15:22
(Alliance News) - Ten Entertainment Group PLC continued to impress analysts at Liberum on Wednesday, as the ten-pin bowling operator shrugged off hot summer weather and cost-of-living fears to post an interim revenue hike.
Liberum has a 'buy' recommendation for the stock. It lifted its price target to 400 pence from 370p.
Shares in the company rose 4.7% to 197.80p each in London on Wednesday afternoon.
Despite a share price climb, Liberum said "there is a clear disconnect between valuation and performance".
Ten Entertainment swung to a pretax profit of GBP21.0 million in the six months that ended June 26 from a loss of GBP10.8 million a year before, as revenue jumped to GBP63.2 million from GBP10.6 million.
The bowling alley operator said it is "delighted" with the growth as last year it benefited significantly from exceptional sales due to UK 'staycations' and the initial pent-up demand from the release of Covid restrictions.
Liberum noted demand remains ahead of pre-Covid levels.
"It is becoming evident that the new base level of demand is over 30% higher than pre Covid driven by innovation, refurbishment, and a focus on value for money," the broker said.
In the 11 weeks since June 27, like-for-like sales are 0.5% higher year-on-year and up 42% from pre-Covid levels.
"This is particularly impressive given the hot summer weather which is not usually conducive to indoor entertainment," Liberum added.
"With now over a year of trading since the May 2021 post lockdown reopening, it is becoming evident that the boost in sales levels is not just a temporary reopening surge."
Part of the reason why Ten Entertainment has been attractive to consumer is the firm's "value for money", Liberum said.
The broker explained: "[Value for money] remains high with bowling prices frozen at 2019 which is clearly resonated with consumer at a time when household incomes are being squeezed. The average realised price of a game of bowling in [the first half of 2022] was GBP5.19 (including VAT), 2.1% lower than [the first half of 2019] with set targeted discount periods driving footfall and a 7.4% increase in average spend per customer to GBP15.98."
Liberum said a family of four can enjoy two games of bowling, and a burger and fires each for GBP66.78 in total at a Ten Entertainment site in west London. This is roughly on par or perhaps cheaper than a meal out at restaurants such as Wagamama and Five Guys.
It is not just the UK that has been donning bowling shoes and hunting for strikes and spares. New York-listed Bowlero Corp last week Thursday said annual revenue more than doubled to USD911.7 million from USD395.2 million.
"Impressively, Bowlero also increased adjusted [earnings before interest, tax, depreciation and amortisation ] margin by over 1,000 basis points relative to pre-pandemic levels," Liberum remarked.
By Eric Cunha; [email protected]
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