Thursday, 17 April 2014

Merlin Entertainments builds LEGO story

"Shrek’s Friends" first site is not that far far away In a quiet period ahead of the Jan-April IMS, we have looked again at some of the longer term attractions of the group’s development strategy. We see the growth curve extended by the recent strategic alliance with DreamWorks (opening summer 2015) and the scope to fully fund another wholly owned and operated LEGOLAND Park – quite possibly sited in North America. Merlin’s compounding growth story - funded from internal cash flows - should provide ample rewards for investors over the medium term. We remain BUYers.

Q1 IMS trading update – due 15 May This will be the first IMS since IPO. The Jan-April period usually generates c.25% of revenues, with about two-thirds of the group’s sites open, albeit in low season. However, we do expect an upbeat statement, especially with regard to LEGOLAND in North America, given that (a) the parks are open, and (b) the launch of the LEGO Movie should have boosted trading. The timing of the statement could prove helpful for any secondary placing, since the post IPO lock ups end in mid May. This could be very helpful for liquidity as private equity still own >30% of the shares.

No comments:

Post a Comment