Business Overview
Ten Entertainment Group Plc (LON: TEG) is a Bedford, United Kingdom-headquartered, operator of large, high-quality bowling sites throughout the UK and is the second-largest tenpin bowling operator in the UK with a total of 45 sites operating approximately 1,000 bowling lanes. The company not only provides bowling proposition, but also offer a wide variety of family-oriented entertainment activities which includes amusement machines, table-tennis, soft play, laser games, pool tables, and restaurants and bars services.

Trading Update (Full-Year ending 29^th December 2019)

(Source: Company Website)
 
On 15th January 2020, Ten Entertainment Group released an update for 52 weeks trading ending 29th December 2019. The company made decent progress in the financial year 2019, with a total sales growth of 10.2 per cent, primarily driven by investment. The company has shown an 8th consecutive year of growth, with sales growth of 8 per cent on LFL (Like-for-like) basis. Driven by technology re-engineering programme of Pins & Strings resulted in cost efficiencies, which helped the company in 70 per cent of its estate. The company underwent a refurbishment process for its four sites, and all are performing well. The company made an additional investment in one of its prime site and has been used as a concept site with new entertainment experiences. The company’s newbuild site, Manchester Printworks, is scheduled to inaugurate in the first half of the financial year 2020. The company’s pipeline of new site opportunities continues to increase with acquisitions and new developments. The company expects its adjusted EBITDA for the financial year 2019 to be in line with the expectations of the market.The full-year results are expected to be announced on 25^th March 2020 by the company.

Share Price Performance

Daily Chart as of February 11^th, 2020, before the market close (Source: Thomson Reuters)

Ten Entertainment Group Plc shares were trading at GBX 301.65 at the time of writing before the market close (at 1:44 PM GMT) on 11^th February 2020 and were up by 2.25% versus the previous day closing price. Stock's 52 weeks High is GBX 339.00 and Low is GBX 200.00. The shares of the company have delivered a negative return of 5.73 per cent in the last week. The company’s stock has given investors 16.24 per cent of a positive return in the last three months. The group’s stock is reflecting lower volatility as against the benchmark index based on the company’s beta of 0.93. Total outstanding market capitalisation was around GBP 191.42 million, with a dividend yield of 3.86 per cent.

Conclusion
Though bowling is a low-frequency and low-ticket activity, it is exposed to UK economic conditions and consumer confidence, which might come under some stress due to impending Brexit. Changes in consumer disposable income might impact on the share of income, and consumers would spend on a leisure activity. However, helped by growing enthusiasm for spending more of their time and income on experiences, coupled with an increasing trend of consumer demand for leisure experiences and competitive socialising, the business is well situated to profit from this trend, which is forecasted to grow to GBP 126 billion by the year 2023. To drive long term growth, the company is engaging in more targeted marketing and online activity.

Based on the above rationale, we have given a "HOLD" recommendation at the closing price of GBX 295.00 (as on 10^th February 2020).

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