nk1999
16 Mar 2017
Berenberg Details from ADVFN:"Shares in Merlin Entertainments are only worth 375p and should be sold, said Berenberg on Thursday, downgrading its rating on the Legoland and Madame Tussauds owner.With the stock closing at 497p the day before, analyst Owen Shirley in London moved to a 'sell' recommendation from his previous 'hold' due to a feeling that investor patience is wearing thin and that "Merlin is potentially one misstep away from triggering a material de-rating".Results two weeks ago showed its largest division, Midway, recorded a constant-currency EBIT decline of 10% in 2016 and Shirley calculated that, on a same-site basis, visitation has been declining for the last three years.Although management blamed weak holiday visitation to the UK for the weak performance in the first nine months of 2016, despite a material improvement in the final quarter, Midway achieved a "negligible" improvement in like-for-like sales."Even more of a concern is the fact that Merlin's ability to offset declining visitation with pricing appears to be diminishing."What's more, hitherto-exceptional Legoland has seen LFL growth decelerate and turn negative against tough previous year comparisons.Despite the release of 'Lego Batman Movie' and 'Lego Ninjago: Masters of Spinjitzu' in 2017, Berenberg cut its LFL estimate to 5% growth this year from 7% and cautioned that downside risk into the first quarter "is significant, with only California, Malaysia and the struggling Florida park contributing for most of the period".With capital expenditure being bumped up, free cash flow yield is only forecast to be a lowly 0.4%"
rhino666
16 Mar 2017
Re: Analysts and My Strategy Merlin looking weak today and I couldn't see why. Guessed it was ex-div but no we have one of those genius broker downgrades............................'Berenberg today downgrades its investment rating on Merlin Entertainments PLC (LON:MERL) to sell (from hold) and cut its price target to 375p (from 440p)'Decided to buy a few after selling out of Anto and Fres for a quick profit today.
Eadwig
08 Mar 2017
Re: Analysts and My Strategy Not going the way I thought it would so far, analysts seem to like the:[I missed this before my sale @490p on Monday, it might have given me confidence to set my target a little higher]Mon, 6th March 2017 - 09:20Deutsche Bank today reaffirms its buy investment rating on Merlin Entertainments PLC (LON:MERL) and raised its price target to 530p (from 490p).[and this one is what probably pushed it through my @490p target on Monday PM]Mon, 6th March 2017 - 15:40Morgan Stanley today reaffirms its overweight investment rating on Merlin Entertainments PLC (LON:MERL) and raised its price target to 560p (from 520p).
Eadwig
06 Mar 2017
Re: Analysts and My Strategy Sold 1 tranche today @490p (so expect the sp to sale through 500p again now)I retain 1 tranche and stick with my strategy of playing this stock for a period of years with every intention of adding again under @450p - assuming the pattern of the last 18 months.
Eadwig
05 Mar 2017
Results Transcript, Q&A I've been through the earnings call transcript now and it has put a lot of worries to bed for me. I would urge anyone else interested to seek it out and read it. Some highlights:The headwinds in Florida were not only the result of the shooting in Orlando (the biggest tourist city in SE USA where MERL have assets) but also scares due to the Zika virus.Like for Like disappointments are convincingly covered as to the reasons why with unforeseeable cost rises (like the living wage) and others still to come, including 50% total business rates hike.Tax was a large figure and even larger allowed for in 2017 - but I think they are likely to see tax cuts in UK and USA at least, so that should boost cash flow and profits.My worries that the company was over-playing the impact of terrorism have been allayed. So far as they have trustworthy tourist figures, the drop off in sales in certain areas correlate exactly with terrorist attacks in places like Orlando, Berlin, Paris. Its very convincing. The good news is the bounce back is pretty quick and most places are already back to normal. London, where the greatest number of assets are also suffered, but, the last two months of 2016 and so far in 2017 the weak pound is very much having the catalyst effect I thought it would - one of my main reason for buying into MERL when I did.Due to the uncertainty of security going forward, they've built quite an allowance in the 2017 guidance. If we are lucky in that kind of area, MERL will see better than expected figures as a result, for sure.Major openings in 2017 in Japan and Korea are far less likely to be hit by terrorism (in my opinion), and geographic diversification remains part of their strategy, ultimately to see revenues 1/3rd from Europe, Americas and Asia-Pacific. This is reflected in the new projects, none of which are in the UK but mostly in USA and Asia-Pacific.There's a good chance the mid year 2017 trading update will see the share price take a hit. This is due to calendar quirks on peak holiday times which effectively saw 2 Christmas periods in 2016. 2017 will have revenues weighted towards H2, so look out for a buying opportunity here.They have a brand new brand, possibly a game changing product, coming out in 2017, almost no info. on it yet, very tight lipped.Final word. As most of MERL is aimed at families with young kids, I also see this as a play on population growth that gets the benefits of the growth early. It is also a play on increased leisure time and spending power for families throughout the world, including emerging markets. Ultimately, I see the tie-up with media through branding, advertising and merchandising merging with the consolidation in the telecoms industry and the likes of MERL will end up as a takeover target at some point from one of the huge global telecoms giants that I predict will control most of the media, including the internet, in the future as what the definition of 'telecoms' is and what it delivers becomes more and more blurred around the edges.
Eadwig
04 Mar 2017
Analysts and My Strategy 3 Mar 17 JP Morgan Cazenove today reaffirms its neutral investment rating on Merlin Entertainments PLC (LON:MERL) and cut its price target to 450p (from 460p)No harm in slightly lowered expectations, and probably warranted given the continued references to 'challenging conditions', 'geo-political uncertainties' etc that always seem to accompany their trading reports since I've been following them.Those below will probably be updated now the results are known and the conference call has been had, which might begin a fall in share price as I expect they will be mostly downgrades or at least cuts in price targets. No matter what you think of brokers and analysts, they do impact share price when issuing announcements, and that's just a fact of the markets, so I think a sell at these higher levels as outlined in my strategy based on the pattern in the chart below, is probably not the worst idea. Note the general rise of the 200 day EMA though, showing the underlying upward trend of this growth play, as well as the higher highs and higher lows referred to previously. If I sell now around @480-490p my next buy Price may be around @440p, assuming the pattern continues to play out.27 Feb 17 Peel Hunt today downgrades its investment rating on Merlin Entertainments PLC (LON:MERL) to hold (from buy) and left its price target at 510p.20 Feb 17 Barclays Capital today reaffirms its overweight investment rating on Merlin Entertainments PLC (LON:MERL) and raised its price target to 575p (from 520p).22 Dec 16 Goldman Sachs today reaffirms its neutral investment rating on Merlin Entertainments PLC (LON:MERL) and raised its price target to 500p (from 470p).4 Nov 16 Berenberg today initiates coverage of Merlin Entertainments PLC (LON:MERL) with a hold investment rating and price target of 440p.3 Oct 16 HSBC today initiates coverage of Merlin Entertainments PLC (LON:MERL) with a buy investment rating and price target of 530p.
Eadwig
04 Mar 2017
Re: US Results Summary Hardboy, " But they have a fair number of people with guns who shouldn't be allowed near anything dangerous"Its a good point, and turns out, now I've read the results, that the 'challenging headwinds' in Florida were mainly to do with the Orlando shootings. This company seems a bit obsesses with such threats, but then I'm guessing if the queues outside Mdme Tussauds are anything to go by, they're constantly being warned about security threats and the like. Also, they seem very convinced that terrorist attacks do impact their business and they have the detailed numbers so I suppose we have to trust them on it - and unfortunately expect further set-backs too.Unfortunately, Americans are particularly frightened of terrorism, though don't appear to realise how much closer they are to living with it than most of us.,The main driver for the US, though, is the planned openings there, the stronger economy and the strength of the US dollar, when converting profits to pounds. I agree with whoever made the comment that the like-for-like growth (or lack of) is worrying. They need to get on top of that quickly if the markets are going to continue to support such a high P/E. These results certainly don't vindicate it, even though next year is almost certainly going to be better.I had a limit order to sell a single tranche yesterday @490p. I'll keep that in place next week and may take @485p if necessary (and offered). Syill with intention of buying back plus more later. The chart I included shows great volatility, but a definite trend of higher highs and higher lows within it. I don't see any great reason for that pattern to change anytime soon, (over next year at least) and I'm expecting a market correction at some point sooner rather than later, which will surely drag MERL down along with everything else, thus presenting the next buying opportunity.Note, I'm not SO convinced of my predictions that I'm happy to sell both my current tranches.
Hardboy
03 Mar 2017
Re: US Results Summary Excellent post Eadwig, Just minor comment: "US (less likely to be hit by terrorism causing people to avoid city centres and crowded attractions)" But they have a fair number of people with guns who shouldn't be allowed near anything dangerous. (iii won't let me use the words I want to to describe them.) If someone can go round gunning people down in night clubs, they can do it at leisure parks. Having said that I think Disney in the US has a good record. It could happen anywhere, and I think with Trump in the White House, acts are slightly more likely, as there will be no clamp down on gun ownership, and xenophobia is almost being encouraged.
Eadwig
02 Mar 2017
US Results Summary I got caught out by the results having noted the wrong date. I intended to sell a tranche (50% of my holding) before hand (as close to @500p as possible) with the intention of buying back later, even though I will be averaging up. I'll probably still sell a tranche if it continues falling tomorrow, the chart below suggests it may have some way to drop yet below the 50 day EMA, but there may be a little bounce back first.This in the belief that 2016 was always going to underwhelm for several reasons, including terrorism in Paris and Istanbul (although I'm not convinced the impact is quite as big as they make out, especially when extrapolating to other European cities. I haven't read the results yet, but that was my take from the last trading update).I haven't seen the guidance for 2017 either, but I'd be surprised if growth doesn't accelerate well, fuelled by:* Expansion in the US (less likely to be hit by terrorism causing people to avoid city centres and crowded attractions) * More hotel accommodation, which is showing very good returns* Increasing growth in European economies* The gradual comeback of Alton Towers* The Lego film releases, which proved a great boost previously to MERL and also have the same effect on Disney parks when they have similar new film release drivers.* Continued expansion in Asia and Australia.This press release about the US operations gives quite a different slant on things (judging from the comments on the board so far), and the Fx bonus looks set to remain through 2017 - so far as anyone can tell. I very much remain a holder here, and it has always been my intention to add on weakness up to four tranches, but also to trade around the position as I build it. You do have to be in for the longer term with this business though, I believe, even though there are plenty of opportunities to trade the slow volatility pattern shown on the chart.NEW YORK, March 2, 2017 /PRNewswire/ --Merlin Entertainments plc (MIINF), a global leader in location-based entertainment and operator of iconic visitor attractions such as LEGOLAND California and Madame Tussauds New York, today reported its results for the year ended 31 December 2016. Revenue was £1,428 million and EBITDA was £433 million.Nick Varney, Chief Executive Officer, said: "We have delivered earnings growth of 9.3% in 2016, reflecting the benefits of our strategy of portfolio diversification.Despite a number of headwinds in 2016, including a difficult market for visitor attractions in Florida, we are pleased with the progress made in the US, generating revenue of £404m from our North American attractions up from £336 million in 2015. We opened our 100th Midway attraction, a new LEGOLAND Discovery Centre in Michigan, and visitors to Madame Tussauds in New York will have enjoyed seeing their favorite Ghostbusters® characters and sets from the film up close and personal in a one-of-a-kind experience.The roll out of new Midway attractions will continue in 2017, as we open Madame Tussauds Nashville - our first-ever attraction centered around music stars, and a LEGOLAND Discovery Center in Philadelphia. We also have ambitious plans for our two US LEGOLAND Parks in 2017, as we open the 166 chalet Beach Resort at LEGOLAND Florida, and launch new LEGO Batman and NINJAGO themed products and features to coincide with the two LEGO movies out this year. We continue to explore opportunities for further full-scale LEGOLAND Parks in North America, so watch this space!"Notes to Editors: There are seven LEGOLAND Parks around the world, including in Carlsbad, California and Winter Haven, Florida;Merlin operates over 100 Midway attractions around the world. These are typically smaller, indoor attractions with a one-two hour visitor dwell time with brands including Madame Tussauds, LEGOLAND Discovery Center, SEA LIFE and the London Eye;At peak, there are c. 6,500 employees across the US;There were c. 14 m
rhino666
02 Mar 2017
Re: Preliminary results Agree HardboyThese same reasons are really why I was put off investing when this first went to market.Great company though and I look forward to investing when the time is right.
Hardboy
02 Mar 2017
Re: Preliminary results "markets not impressed by the progress"I think that's because there is very little progress - like for like sales growth of 1.4% & operating profit decline of 6.2% is not going to set any great momentum in the share price. I'll stick by my comment of December (I think it was) saying it is currently not growing quickly enough to merit such a high PE; and the low yield does not support the high price either. Not surprised by the market reaction; and hopeful of a drop to what I think fairer value.
peterpiper313
02 Mar 2017
Preliminary results It seems the markets not impressed by the progress.This morning s presentation is on the Merlinentertainments. biz website.
Eadwig
13 Dec 2016
Re: Trading Update "LEGOLAND Group has shown continued positive momentum following two years of exceptional growth, although trading in Florida remains soft due to challenging market conditions"That statement concerned me most in the trading update. I since discovered that Lego for US market is made in Mexico, so liable for a Trump 20% import tax to be slapped on it. Dunno if that's the 'challenging conditions' or not. Unsure why it would make a lot of difference to them, so maybe that is still a mystery.
Hardboy
13 Dec 2016
Re: Trading Update Here we are again, Eadwig.I bought Merlin when they floated, managed to sell at a nice profit before the Alton Towers disaster really affected the share price. Then I waited till the claims and prosecutions were out of the way, and am keen to get back in. Like you, I am looking for around 420; and still hopeful. The latest trading update was mixed; and I feel they are not quite producing the speed of growth to merit the current premium in the share price. However, I do believe they have almost unlimited scope for growth. World wide brands with most world wide countries prime for entry. My impression of management is also very good. Nothing tests management like a disaster; and once the Alton Towers tragedy occurred they seemed to do & say all the right things.
Eadwig
13 Dec 2016
Re: Trading Update Added a second tranche @425p today. Hoping to go four tranches altogether, can't help feeling I might get a chance at low 400s if the market corrects.Every chance of the dollar rising on a Fed hike, MERL earns dollars amongst other foreign currencies, it doesn't have a lot of commodity type costs that will cost more because they're priced in dollars, unlike most of the other foreign currency earners on the FTSE.
