2 thoughts on “September 2017 Recommendations – Kids Investment Issue #2”

  1. Check out Merlin Entertainment, similar to Disney’s theme park side of the business but a younger (2013 Q4 listing) and and more adaptable fast growing company. They run Legoland worldwide and some familiar names in the UK such as thorpe park, alton towers, etc and big city attractions such as Madam Tussaud’s, sea life aquariums, the “Eye” brand observatory such as London Eye. Their expansion is aimed at providing day trips so smaller but more parks around the globe, in contract to Disney who offers fewer but bigger theme parks. They are now working with Dreamworks (Disney’s competition) on certain park segments, i.e. Shrek’s adventures and providing new resorts accommodation for their parks.

    In addition to the impressive portfolio, if you become a share holder of a certain minimum shareholding amount at the annual cut off date, you gain shareholder perks of discount up to 40% for annual pass to their group’s UK attractions for the family. Great for the family, especially as a UK resident in the south.

    From a share fundamental side, they currently trade at higher P/E of 22 vs Disney of 17 as they are growing at a faster pace, meriting the valuation. Paying 1.7% a growing 1.7% dividend and with dividend coverage of 2.5x+. The shares have taken a bit of a beating (-10 to -15%) in summer 2017 due to terrorist attacks in London and jitterred investor’s nerves as the UK account for approx. 40% of group’s revenue. Rest assured though with the low pound exchange rate, tourist numbers from the UK tourism board has shown year on year increase and the global business is performing in expectation. There is a lot to look forward to in this company.

    1. I like the potential growth of Merlins Entertainments. Yes its definetly a new niche in the market to rival Disney. There have been talks about Disney buying up Lego.

      I guess Lego is still not a fully public company for trading as the family wants to keep the control. Merlins are just spinning it off as a theme park base business.
      As you mentioned on the basis of potential expansion and venture with other company poses a good value for growth. The management are showing good fresh ideas creating entertainment value for families.

      I do feel that Disney’s current value looks attractive but still not attractive enough to buy a big portion for billionaire investors. A value of 88-92 would pose a good value buy and Warren Buffett have been rumoured to value it at the 80-90 mark. The only downfall not to attract Mr Buffett invesment is the low dividend payout and lack of buyback shares.

      For longevity it is still a healthy buy and forget. Other rumours i have read are Disney buying up Nintendo. Lets watch this space.

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