Acquires STAR Bowling

Familiar business, less risk

Updated profit view on Live Entertainment 2019-2020

Weaker period ahead, with or without start-up costs?
Q2 and Q3 are seasonally the weaker parts of Moment Group’s fiscal year. For Q2 we expect y-o-y pro rata sales growth of 15%, but with a slightly weaker EBIT due to Kungsportshusets start-up costs. In Q1 management declared 7m SEK as EO costs attributed to the start of Kungsportshuset. We are therefore careful and calculate with further costs related to this new venue in Gothenburg.

Another activity centre bought
Moment Group announced the acquisition of STAR Bowling in June for SEK 50m. STAR has revenues of SEK 50m and a profit margin of 22%, implying a purchase multiple (EBITDA) of 4.5x. The purchase multiple is similar to the acquisition of Ballbreaker, made last year in November. STAR Bowling consist of 3,000 sqm of space and can house up to 780 guests. Like Ballbreaker it has a restaurant and bar and can offer conference arrangements for corporations. We find the business similar to other entities owned by Moment Group which decreases potential operative risks.

Bond is in action
The bond, issued this spring, is now put into use and NET debt/EBITDA of 0.4x 2018e indicates plenty of head room for M&A. We expect STAR Bowling, on its own, to cover the full financing costs of the bond. We have also revised upwards our view on profit margins for Live Entertainment for 2019e and 2020e by +6%. However, the group margins are still below Moment Group’s financial target of 6%. The total effect though will see EPS increase by 6% this year and 25% in 2019e.

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