Following the recent release of full-year results (FY25), there have been downgrades to EVT’s consensus earnings forecasts over the medium term. These mainly reflect EBITDA cuts for the Entertainment division in the range of ~25%-35%, reflect more moderate operational leverage on the back of revenue downgrades.
The downgrades have weighed on the share price since the results release. Accordingly, we recently researched EVT in The Dynamic Investor to assess whether current levels present an entry opportunity.
About EVT Ltd
EVT Ltd (ASX: EVT – formerly Event Hospitality & Entertainment) is a provider of entertainment, hospitality, and leisure services. EVT has operations in Australia, New Zealand and Germany. The Company reports three divisions:
1. Entertainment: This division comprises cinema operations in Australia, NZ and Germany primarily under the EVENT brand.
2. Travel: This division comprises Hotels and Resorts as well as the Thredbo Alpine Resort. The Hotels & Resorts business operates QT Hotels & Resorts, Rydges, Atura and Lylo brands (which are EVT brands), in addition to a suite of other brands that are managed by EVT.
3. Properties: EVT’s property portfolio, which includes a large number of hotels, was valued at $2.31b as at 30 June 2025. The earnings generated from the Company’s property assets are effectively low-risk rental income.
Key Fundamental Drivers
Improved Outlook for Entertainment Division
The outlook for box office collections, and EVT’s Entertainment earnings is likely positive in 1H26, The supply of quality blockbuster titles is increasing. The Company typically reports strong results in all markets when blockbuster films are released. EVT currently expects 19 blockbusters (i.e. films exceeding $15m at the Australia box office) in FY26.
While EVT expect the same number of films for FY25, it is worth noting that more films will be announced for 2H26, although not so many blockbusters. The line-up for FY26 is still forming and has been impacted by the delayed release of the next Avengers title, previously scheduled for May 2026. However, there are still promising titles set for release. These include the sequel to the 2023 Super Mario Bros Movie, Star Wars: Mandalorian & Grogu, Toy Story 5 and Minions 3.
There are two key factors expected to underpin an increase in earnings for the Entertainment division over the medium term. The first is improving box office supply (with wide releases to return to pre-COVID supply levels in calendar year 2026). The second is supportive demand dynamics for cinema attendance.
Potential for Improved Operating Leverage for Cinema Operations
Cinemas are a high fixed-cost business, with fixed labour plus the cost to maintain physical assets making up the majority of EVT’s fixed costs. Accordingly, during periods of lower admissions, operating de-leverage becomes evident, as was the case over the period FY20 to FY24. With a more favourable outlook for admissions over the medium term, there is scope for significant operating leverage over the medium term.
Aside from improving admissions, we note two factors supporting expectations for improved operating leverage:
i. EVT has executed well against its premiumisation strategy (i.e. IMAX, 4DX, EVENT Sofa and ScreenX). As well, EVT has invested in pricing strategies and the consumer experience to expand the average spend per head and Average Admission Price in Australia and Germany.
ii. The Company has an advantageous rental/lease profile. It is estimated that around 2/3rd of EVT’s Australian cinema leases may have a turnover clause. This rate is much lower than other retailers and protects EVT. This is because any material ticket price rises that may stem from inflation or the premiumisation of cinemas is less likely to result in higher rents.
Hotels Operations Likely to Expand Market Share
Following a strong result for FY25, the outlook for the Hotels business in 1H26 is positive. This is underpinned by an encouraging Australian event pipeline for 1H26. These include Lions Tour (July/August in all major cities), the Sydney Marathon (August) and The Ashes (from November). The impressive event pipeline provides scope for further increases in the average room rate.
The recent launch of EVT Connect Hospitality and the acquisition of the Pro-invest Hotels business is expected to expand market opportunities
Strong Balance Sheet & Property Portfolio
While the gearing level is higher than recent periods, it remains manageable in light of typically strong operating cashflows. The balance sheet is also supported by property assets worth $1.43b (or ~55% of total assets).
The Company has historically maintained a strong balance sheet as it typically prefers to pursue opportunistic acquisitions of complimentary leisure assets. EVT also prefer to maintain a high dividend payout ratio of 60-80% of fully franked dividends, as opposed to capital returns or share buybacks.
Fundamental View
EVT shares are currently trading on a 1-year forward P/E multiple of ~29x, which is at the bottom end of the trading range over the last two years. The current multiple is also unappealing in the context of an EPS growth profile of +34% over FY25-28 on a CAGR basis.
The shares are also trading at a significant discount to valuation of ~20%. We consider the key catalysts for a recovery in the shares to be:
- Improving earnings momentum in both the Entertainment and Hotels divisions
- Unlocking further value in the property portfolio
- Shift in earnings composition to the higher-value parts of the EVT portfolio
Charting View
The recent decline in EVT has seen it break the uptrend line that had been in place during the past 12 months. There is some support near-by, so for the EVT chart to turn a more positive, we need to see it bounce here and get back above that downtrend line. A weekly close above $14 would indicate that EVT is ready to move higher again. Otherwise, we would be looking at the next level of support to come in closer to $12.
Michael Gable is managing director of Fairmont Equities.
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