Premium Cinema And Hospitality Expansion Will Drive Future Advantage

Key Takeaways

• Premium cinema experiences and stronger film supply are driving higher customer spend, solid net margin expansion, and ongoing yield growth.
  
• Asset-light hotel management expansion and capital recycling into higher-yield properties position EVT for revenue growth and improved long-term profitability.
  
• Reliance on consistent film releases and favorable market conditions, coupled with climate, operational, and digital disruption risks, threatens profitability and growth across entertainment, hospitality, and property divisions.

Catalysts

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

• Improving film supply is expected to drive higher admissions and increased customer spend, with consumers showing willingness to pay more for premium experiences and blockbuster titles; as film production returns to normal, revenue and margins in cinemas should recover and grow due to significant operating leverage.
  
• Strategic focus on expansion of asset-light hotel management and third-party brand platforms (through projects like EVT Connect Hospitality and the Pro-Invest acquisition) positions EVT to capture growth from rising middle class travel and increased demand for unique leisure experiences, supporting top-line revenue growth and higher EBITDA margins.
  
• The premiumization of cinema experiences (IMAX, 4DX, Vmax, luxury seating) and focus on Better venues have resulted in steadily rising average admit prices and spend per head; this ongoing premiumization trend supports sustained yield growth and net margin expansion.
  
• The company's ability to recycle capital via property divestments and reinvest in higher-yielding hotel assets, alongside a growing property development pipeline, unlocks asset value and long-term capital appreciation, boosting both earnings and the overall asset base.
  
• Continued investment in data-driven customer engagement, dynamic pricing, and loyalty programs enables targeted marketing and improves retention, directly increasing spend-per-customer and enhancing EBITDA margins over the long term.

EVT Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming EVT's revenue will grow by 4.6% annually over the next 3 years.
• Analysts assume that profit margins will increase from 2.7% today to 7.1% in 3 years time.
• Analysts expect earnings to reach A$100.1 million (and earnings per share of A$0.61) by about September 2028, up from A$33.4 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting A$112.7 million in earnings, and the most bearish expecting A$80.5 million.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 34.0x on those 2028 earnings, down from 66.4x today. This future PE is lower than the current PE for the AU Entertainment industry at 41.0x.
• Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 10.05%, as per the Simply Wall St company report.

EVT Future Earnings Per Share Growth

Risks

• EVT's entertainment division remains highly sensitive to the Hollywood blockbuster release schedule, with results dependent on consistent film supply; ongoing disruptions (e.g., strikes, delays, or shifts in studio strategies such as direct-to-streaming releases) pose a long-term risk to admissions, box office revenue, and therefore group EBITDA.
  
• The company's expanding property and hotel portfolio is materially exposed to macroeconomic conditions, including rising interest rates, sluggish economic growth in key markets (especially New Zealand outside of Queenstown), and tightening consumer discretionary spending, all of which threaten future revenue, occupancy, and RevPAR trends.
  
• EVT's profitability in Thredbo and alpine hospitality assets is vulnerable to increasingly erratic weather patterns and climate change, evidenced by the worst winter in 20 years and rising snowmaking/grooming costs, which could compress margins if adverse seasons continue or intensify.
  
• The transition toward asset-light hotel management and third-party platforms (e.g., EVT Connect, Pro-Invest acquisition) introduces integration, operational, and brand consistency risks; unsuccessful execution or conflicts with owned/independent brands could dilute earnings, disrupt synergies, or lead to underwhelming EBITDA contribution versus expectations.
  
• EVT's physical entertainment venues face steady long-term competition from streaming platforms, digital/hybrid event formats, and potential audience demographic shifts (aging populations, lower youth engagement), which may structurally limit or reduce admissions growth, increase fixed-cost deleverage, and slow or reverse revenue gains in cinema and live event businesses.

Valuation

• The analysts have a consensus price target of A$15.747 for EVT based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of A$18.0, and the most bearish reporting a price target of just A$13.3.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be A$1.4 billion, earnings will come to A$100.1 million, and it would be trading on a PE ratio of 34.0x, assuming you use a discount rate of 10.1%.
• Given the current share price of A$13.65, the analyst price target of A$15.75 is 13.3% 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.