Lower Expenses Support a YoY Growth in Main Event’s Net Profit

• A reduction in direct and operating expenses has fueled a 5.7% YoY increase in Main Event Entertainment Group Ltd.’s net profit for the nine months ended July 31, 2021, to $9.17Mn (EPS: $0.03). 
• Total revenues generated during the 3^rd quarter was the strongest performance since the quarter ended April 2020, owing to good growth in digital signage services. However, year to date, revenues are still down 37.2% relative to the same period last year. MEEG experienced only moderate shifts in business activity following the brief ease in restrictions for the entertainment industry in July, 2021, as such revenues earned from core activity continue to lag significantly behind pre-Covid levels. 
• Although revenues were down, this was outweighed by a 52.3% drop in direct expenses and 29.3% decline in admin and general expenses, which fueled the positive net profit outturn. 
• Given that restrictions to stem the effects of the pandemic will extend through to the final quarter of this financial year, and new variants of the coronavirus continue to emerge, the entertainment sector will continue to be negatively impacted. This will create uncertainty in MEEG’s business model in the near term, and revenue will likely remain depressed. 
• Main Event’s stock price has increased 31.3% since the start of the year and closed Wednesday’s trading session at a price of $4.20 per share. At this price, the stock trades at a P/B ratio of 2.3x earnings, which is below the junior market average of 2.1x.

(Source: MEEG Financials & NCBCM Research)