Date: September 16, 2019
Main Event Entertainment Group Limited (MEEG) for the nine months ended July 31, 2019 recorded a total of $1.36 billion in revenue compared to $1.07 billion booked for the period ended July 31, 2018, a 28% increase year over year. Revenue for the quarter rose 29% to close the quarter at $468.61 million relative to $363.71 million booked for the corresponding period in 2018. Management noted, “ Revenue growth has maintained this year , driven by our sustained thrust to diversify the Company’s core income stream. The M style experience, our presence in the west and the M academy project have been material contributors to growth.”
Cost of sales for the nine months increased 37% year over year to $760.84 million relative to $556.11 million. Gross profit for the period thus improved by 18% to $603.61 million (2018: $509.66 million). Gross profit for the quarter increase 21% from $163.95 million in 2018 to $197.83 million. MEEG booked other income of $14.16 million for the nine months, $11.77 million higher than the prior year’s corresponding period of $2.38 million.
Management indicated, “We have encountered cost control challenges this year. We have taken note of the increased prices in third party inputs and increased incidents of inefficiency internally. We are actively reviewing our processes and logistics with the aim to improving efficiencies.”
Total expenses rose by 25% to $491.86 million versus $392.92 million recorded for 2018. Of this, administrative and general expenses climbed 28% to $395.73 million (2018:$308.95 million), while depreciation expense increased 20% to $83.46 million (2018: $69.30 million). Selling and promotion expense declined by 14% to $12.66 million relative to $14.68 million booked last year. Total expenses for the quarter amounted to $182.19 million, 35% higher relative to last year’s comparable quarter of $134.62 million. Management noted, “expenses for the current year to date also include a material provision of $22.035 million for Expected Credit Losses (ECL), in accordance with the provisions of financial reporting standard, IFRS9. The ECL provision in the current quarter was $15.706 million”
Consequently, operating profit for the period rose 6% to $125.90 million (2018: $119.12 million).
Finance cost year over year, increased by approximately 31% to $17.81 (2018: $13.64 million) “associated with larger loan facility held at the end of the current year”.
MEEG recorded profit before taxation of $108.09 million, a growth of 2% when compared to last year’s corresponding period of $105.48 million.
The company reported nil for taxes during the period, resulting in net profit totalling $108.09 million booked last year, a 2% increase year over year (2018: $105.48 million). MEEG reported net profit of $14.73 million for the third quarter versus $24.55 million for the comparable period in 2018, a 40% decline.
Earnings per Share (EPS) for the nine months amounted to $0.36 (2018: $0.35), while for the quarter the company booked an EPS of $0.05 relative to $0.08 in 2018. The trailing EPS amounted to $0.32. The number of shares used in the calculation was 300,005,000 units. Notably, MEEG stock price closed the trading period on September 13, 2019 at a price of $6.51.
Balance Sheet Highlights:
As at July 31, 2019, the company’s assets totalled $1.06 billion (2018: $866.47 million), $193.81 million more than its value a year ago. This increase in total assets was largely driven by an increase in ‘Property, Plant and Equipment’ which rose by 14% or $73.34 million year over year to $583.96 million (2018: $510.62 million). ‘Receivables’ also contributed to the upward movement with a 23% increase from $303.91 million booked as a July 31, 2018 to $375.14 million.
Equity attributable to stockholders of the company amounted to $631.08 million (2018: $551.81 million). This translated to a book value per share of $2.10 relative to $1.84 for the corresponding period in 2018.
Analyst Certification -The views expressed in this research report accurately reflect the personal views of Mayberry Investments Limited Research Department about those issuer (s) or securities as at the date of this report. Each research analyst (s) also certify that no part of their compensation was, is, or will be, directly or indirectly, related to the specific recommendation (s) or view (s) expressed by that research analyst in this research report.
Company Disclosure -The information contained herein has been obtained from sources believed to be reliable, however its accuracy and completeness cannot be guaranteed. You are hereby notified that any disclosure, copying, distribution or taking any action in reliance on the contents of this information is strictly prohibited and may be unlawful. Mayberry may effect transactions or have positions in securities mentioned herein. In addition, employees of Mayberry may have positions and effect transactions in the securities mentioned herein.