DEAG Deutsche Entertainment Aktiengesellschaft
Original-Research: DEAG Deutsche Entertainment AG (von Montega AG): Buy

Original-Research: DEAG Deutsche Entertainment AG – von Montega AG

Einstufung von Montega AG zu DEAG Deutsche Entertainment AG

Unternehmen: DEAG Deutsche Entertainment AG
ISIN: DE000A0Z23G6

Anlass der Studie: Update
Empfehlung: Buy
seit: 03.12.2019
Kursziel: 6.00
Kursziel auf Sicht von: 12 months
Letzte Ratingänderung: –
Analyst: Henrik Markmann

DEAG coming closer to achieving annual goals after good Q3 figures

At the end of last week, DEAG published 9M figures and confirmed its annual
goals following the positive operating development in Q3.

Sales growth of approx. 70% yoy: As part of its H1 reporting, DEAG had
already guided for a sales level of EUR 55m in Q3 due to a shift in revenue
caused by a couple of major events (Ed Sheeran, Böhse Onkelz amongst
others). Generating Q3 sales of EUR 59.2m (+69.7% yoy) the company has even
been able to slightly exceed this guidance. Although DEAG’s 9M sales still
fall short of the prior-year basis (-19.5% yoy), management expects a
strong final quarter based on the forthcoming high number of events and
massive advance booking.

Significant margin improvement continues: EBITDA has improved significantly
in Q3 from EUR 0.9m to EUR 4.9m. We believe this can be put down to an
increasing focus on higher-margin events and a growing share of tickets
sold via the company’s own MyTicket ticketing platform. Furthermore, DEAG
is expected to have effectively reduced the platform’s cost base thanks to
the cooperation with SecuTix that started early in Q3.

Since some events of the new shareholdings have developed successfully, but
the existing tax-loss carry-forwards included in consolidation cannot be
offset to some extent, tax expenses have increased substantially in Q3 (EUR
1.4m vs. EUR 0.1m yoy). However, net income prior to minorities still has
increased significantly from EUR -0.6m in the previous year to now EUR
1.0m. Driven by the good development of some majority stakes, however,
minorities have increased significantly as well (EUR 2.2m vs. EUR 0.2m
yoy). For this reason, net income after minorities is EUR -1.2m which is
below the prior-year basis (EUR -0.8m). On the other hand, investment
pay-outs were lower than we had anticipated (EUR -6.2m vs. MONe EUR -10.7m)
which had a positive impact on the cash flow. We have revised our valuation
model on the basis of the slight changes in the group structure for 2019 et
seq.

Promising event pipeline in the most important final quarter: The
management board has confirmed the annual goals (“sales and EBITDA
moderately above the previous year”). This implies another strong sales
growth of some 70% yoy for Q4. Numerous shows (Disney on Ice or Dieter
Bohlen’s tour amongst others) are likely to have a positive impact on
revenue in Q4. Furthermore, DEAG’s high-margin “Christmas Garden” is
represented in six locations this year (2018: 3). As most of the Christmas
Garden tickets as well as a rising share of the concert tickets should be
sold through the company’s own MyTicket ticketing platform, profitability
is expected to be high in Q4 as well. That said, our former expectations
appeared to have been somewhat overestimated, especially in terms of the
top line.

Conclusion: We believe the good Q3 figures combined with the high number of
events taking place in Q4 illustrate that DEAG is likely make operational
progress in the final quarter as well. After having adjusted our estimates
and rolled over the DCF model we confirm our “buy” rating and our price
target of EUR 6.00.



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About Montega

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Universe includes stocks from the MDAX, TecDAX and SDAX as well as selected
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characterized by excellent and frequent contacts to the top management,
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German small and mid-cap companies.

Die vollständige Analyse können Sie hier downloaden:
http://www.more-ir.de/d/19567.pdf

Kontakt für Rückfragen
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Tel.: +49 (0)40 41111 37-80
Web: www.montega.de
E-Mail: research@montega.de

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