Ardent Leisure Group Share Price Is Soaring

Shares of Ardent Leisure Group Stapled Chart [ASX:AAD] are up a whopping 8.20% today.

Why the huge increase in share price for ASX:AAD?

Hong Kong-listed company Sun Hung Kai & Co. Limited has bought a 5.3% share in the company. Sun Hung Kai & Co. Ltd is a financial services firm, headed by Malaysian billionaire Seng Huang Lee.

AAD is the owner of theme parks Dreamworld and WhiteWater World, and indoor entertainment venues such as AMF and Main Event — a bowling leisure centre in the US — along with health clubs and marinas.

Ardent Leisure has been struggling since last year, following the Dreamworld tragedy where four people died.

On 23 February, the company’s share price fell more than 21% following the release of its half year report, which revealed a statutory loss of $49.4 million. The results for the same period in the previous year had been a $22.7 million gain.

Ardent shares plunged 6.5% on 22 June after the company announced results would be lower than previously expected due to the impact of the Dreamworld incident, and the sale of the health club division.

What now for Ardent?

AAD’s theme park division has been struggling, yet it only comprises 11% of the total business. Main Event holds 46% of the EBITDA contribution, and Ardent Leisure Group is planning to accelerate its growth to 200 centres in the US, despite concerns that it will under perform.

Yet it all depends on what happens next in the boardroom. As The Australian reports, some investors are speculating that Lee is in alignment with other investors to overtake Ardent Leisure.

By Selva Freigedo

Selva Freigedo is an analyst at Money Morning. She has a background in financial economics, but what makes Selva´s experiences different to many are the places she has lived and worked. Born in Argentina, she has also lived in Brazil, the US, Spain, and now Australia. She has seen up close many of the economic phenomena that worry Fat Tail Investment Research readers, like hyperinflation, bank bail-ins and governments burdened with so much debt it cannot possibly be repaid.

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