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: 01.12.2020
Kursziel: 4,10
Kursziel auf Sicht von: 12 months
Letzte Ratingänderung: –
Analyst: Henrik Markmann

DEAG closed Q3/20 with positive EBITDA despite significant negative effects
due to corona crisis

Last Friday, DEAG published its Q3 report. As expected, the financial
ratios were strongly impacted by the COVID-19 pandemic and therefore well
below the prior-year figures. DEAG has confirmed its annual targets until
the end of December despite the extension of the “lockdown light” in
Germany.

[TABLE]

Q3/20 sales fell strongly by -87.4% yoy to a mere EUR 7.4m. Given that DEAG
had to either cancel or postpone all major events in Q3/20 due to the
corona-related restrictions in the live entertainment industry this did not
come as a surprise. We had already anticipated a substantial decline as
well (MONe: EUR 4.5m). CTS Eventim and Live Nation, the two much bigger
competitors, also had to post a significant downturn in sales in Q3/20 of
-92.0% and -95.1% yoy respectively. On the bottom line, DEAG suffered a
significant decline in EBITDA of -87.2% yoy in Q3/20 (MONe: -83.5% to EUR
0.8m). However, the company remained in positive territory at EUR 0.6m
thanks to a stringent management of selling, general and administration
expenses as well as a comprehensive insurance coverage (EBITDA CTS: EUR
-15.0m; Live Nation: EUR -384.5m). Liquid funds remained stable after nine
months at EUR 41.6m (30.06.2020: EUR 39.9m), not least because of the
heavily reduced SGA costs (-48.7% yoy to EUR 4.3m) as well as raising of
external capital of some EUR 2m.

Although the “lockdown light” has been extended until the end of December,
DEAG confirmed its annual target, thus expecting EBITDA to at least break
even. As the company had already reported an EBITDA of EUR 0.3m after nine
months and is expected to receive insurance benefits in the final quarter
due to the cancelled „Christmas Gardens“ plus the financial assistance in
November and December announced by the German government, we stick to our
forecast of a full-year EBITDA of EUR 0.8m. Whilst there is still no
visibility as to when the live entertainment industry will see a revival
next year, DEAG already has a sales basis of over EUR 100m resulting from
events already planned. In combination with vaccines that will become
available soon as well as reliable rapid tests, DEAG should be well
positioned with a view to 2021, which is why we keep our forecasts
unchanged.

Conclusion: The weak operating development in Q3/20 is not surprising and
already priced in by the heavy drop in share price. Having in mind the
foreseeable recovery in 2021 and 2022 we stick to our turnaround scenario
and confirm our buy recommendation with an unchanged price target of EUR
4.10.



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About Montega:

Montega AG is one of the leading independent German research institutions
with a strong focus on German SMEs. The Coverage Universe
includes stocks from the MDAX, TecDAX and SDAX as well as selected
second-line stocks and is constantly being expanded through successful
stock picking. Montega is an outsourced research provider for institutional
investors and focuses on publishing research as well as on organizing
roadshows, field trips and conferences. The company addresses long-term
oriented value investors, asset managers and Family offices primarily from
Germany, Switzerland and Luxembourg. The analysts of Montega are
characterized by excellent and frequent contacts to the top management,
in-depth market knowledge and many years of experience in the analysis of
German small and mid-cap companies.

Die vollständige Analyse können Sie hier downloaden:
http://www.more-ir.de/d/21904.pdf

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

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