Digitization And Urbanization Will Fuel Premier Leisure Experiences

Key Takeaways

• Reinvesting unlocked capital from property divestments, alongside operational efficiencies, could accelerate revenue and earnings growth beyond market expectations.
  
• Demographic shifts and advances in hospitality technology position EVT for structurally higher demand, improved margins, and reliable top-line revenue expansion.
  
• Sustained earnings risk stems from cinema declines, volatile content supply, heavy capex needs, geographic concentration, and rising exposure to climate and regulatory disruptions.

Catalysts

Engages in the entertainment business in Australia, New Zealand, Singapore, and Germany.

• Analyst consensus expects capital unlocked from the 525 George Street divestment to drive growth, but this likely understates the potential for a dramatic balance sheet transformation: a substantial proportion of EVT's $2.3 billion property book is underutilized, and continued recycling of these assets on top of 525 could unlock capital for reinvestment at much higher returns, accelerating both revenue and earnings expansion well beyond current assumptions.
  
• Analysts broadly believe the fewer better cinemas strategy will stabilize margin and yield as content normalizes, yet December's results already show EBITDA exceeding pre-COVID levels despite admissions still down meaningfully. As blockbuster film supply resumes in 2026, EVT's sharper yield focus, premium experiences, and improved merchandising mean the group could significantly outperform historical net margins and gross profit, delivering upside to consensus forecasts.
  
• EVT is uniquely positioned to benefit from demographic shifts toward experiential spending, especially as Gen Z and millennials drive long-term demand for "out-of-home" experiences; this secular demand will support structurally higher occupancy and per-guest spend across both hotels and entertainment assets, increasing topline revenue growth reliability over the cycle.
  
• Ongoing digitization and global content proliferation are leading to more diverse, high-quality content with global appeal, which will strengthen EVT's negotiating leverage with studios and open up enhanced monetization of content libraries, creating new incremental revenue streams and bolstering overall group earnings.
  
• EVT's rare combination of owned real estate and integrated operations in hospitality and entertainment makes it a prime beneficiary of hospitality tech advances, allowing it to drive industry-leading operational efficiency and personalized guest experiences-thus compounding cost leverage and expanding EBITDA margins as new tech platforms are deployed at scale.

EVT Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on EVT compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming EVT's revenue will grow by 6.7% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from 0.7% today to 8.1% in 3 years time.
• The bullish analysts expect earnings to reach A$118.9 million (and earnings per share of A$0.73) by about July 2028, up from A$8.8 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 34.6x on those 2028 earnings, down from 298.2x today. This future PE is lower than the current PE for the AU Entertainment industry at 157.5x.
• Analysts expect the number of shares outstanding to grow by 0.15% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 9.88%, as per the Simply Wall St company report.

EVT Future Earnings Per Share Growth

Risks

• EVT's core cinema business faces long-term structural risk from declining admissions, as evidenced by group admissions being down 8.3% year-on-year and 39% below pre-COVID levels, which highlights the secular trend of audience erosion due to the aging population, shifting consumer habits, and alternative content delivery; this exposes revenue and EBITDA to ongoing decline unless blockbuster film supply consistently recovers.
  
• Heavy reliance on blockbuster film releases and unpredictable film slates introduces volatile box office performance, with even management acknowledging that normalized EBITDA and revenue are highly sensitive to the volume and quality of film content, creating sustained earnings risk as the industry grapples with thinning midtier releases and the growing power of studios to control distribution economics and release windows.
  
• EVT's hotel and entertainment assets require ongoing high capital expenditure, with guidance of $140–160 million for upgrades and routine maintenance; this persistent capex burden on an aging asset base could compress free cash flow and reduce net margins, especially if returns on those investments fail to outpace both asset depreciation and industry cost inflation.
  
• The company's geographic concentration in Australia and New Zealand, combined with ongoing underperformance in the New Zealand market and site-specific sensitivity to economic or regulatory shocks, creates material revenue and earnings risk in the event of regional downturns, changing tourism patterns, or unexpected policy changes affecting leisure or property assets.
  
• EVT's high exposure to environmental and weather-related risks-such as Thredbo's EBITDA falling 10% due to extreme winter conditions and summer visitation being down 18.5% from adverse weather-demonstrates escalating vulnerability to climate volatility, which could lead to unpredictable swings in revenue and additional regulatory or sustainability-related capex over time that erode profitability.

Valuation

• The assumed bullish price target for EVT is A$19.0, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of EVT's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of A$19.0, and the most bearish reporting a price target of just A$12.8.
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be A$1.5 billion, earnings will come to A$118.9 million, and it would be trading on a PE ratio of 34.6x, assuming you use a discount rate of 9.9%.
• Given the current share price of A$16.23, the bullish analyst price target of A$19.0 is 14.6% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.