Endeavour Group: Returning to a stable operating environment

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Alex Lu
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By Alex Lu
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Date posted:
16 August 2023, 8:00 AM
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  • Endeavour Group's (ASX:EDV) FY23 result overall was marginally softer than expectations.
  • Key positives: Group EBIT margin +60bp to 8.6%; Group ROFE +40bp to 11.8%.
  • Key negatives: Hotels performance was weaker than forecast as gaming (highest margin) growth slowed and the overall sales mix reverted to pre-COVID levels; Operating cash flow fell 19% to $767m due mainly to increased working capital and tax paid; FY24 net interest guidance was much higher than expected.
  • Management said customer trends remain resilient and stable thus far in FY24 with sales for the first six weeks in Retail up 2.5% and Hotels up 4.6%.
  • FY24-26F EBIT remains broadly unchanged (-1% to 0%) while underlying NPAT drops by 7% after factoring in higher net interest expense.
  • Our target price falls to (login to view) and we maintain our Hold rating.

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