CONSOL Energy Inc.

CEIX Details

CONSOL Energy Inc. (NYSE: CEIX) is a Pennsylvania-based producer and exporter of bituminous coal and carries its mining operations in the Northern Appalachian Basin. Its primary business segments consist of 1) Pennsylvania Mining Complex (PAMC), comprising three large-scale underground mines:  Bailey, Enlow Fork, and Harvey, and can produce approximately 28.5 million tons of coal per year, and 2) CONSOL Marine Terminal, which provides coal export terminal services through the Port of Baltimore, it can both store or transport coal directly into vessels from rail cars. In addition, CEIX is also developing the Itmann Mine, with a production capacity of 900 thousand tons per year. As of July 12, 2021, the company’s market capitalization stood at USD 648.49 million.

Q1FY21 Results: CEIX reported total revenues of USD 330.76 million for Q1FY21 (ended March 31, 2021), compared to USD 275.10 million in Q1FY20, realizing double-digit growth of 20.23% YoY, primarily due to improvement in volumes of coal sold, which increased by 1.0 million tons to 6.9 million tons in Q1FY21. The impact of the strong performance of topline reflected in adjusted EBITDA, which reported an upside of 69.57% YoY to USD 106.72 million in Q1FY21 vs USD 62.93 million in Q1FY20. Growth in EBITDA can be attributable to a reduction in the average cash cost of coal sold per ton, partially offset by a reduction in average revenue per ton sold. Net income surged by more than tenfold to USD 26.40 million in Q1FY21 in contrast to USD 2.37 million in Q1FY20.

Key Risks: In FY20, CEIX generated ~55% of its coal revenue from three major customers. Hence, any disruption in the business activity of these customers can adversely impact its financial position. In addition, prices of coal are highly volatile and unpredictable, and any unfavorable movement in the prices could negatively impact the topline of the company. Furthermore, about 35% of CEIX’s revenues were in currencies other than USD in FY20, exposing it to currency fluctuations. Lastly, most of the mining operations of CEIX are in the Northern Appalachian Basin, and any disruption in the production process could adversely impact its operations.

Outlook: For FY21, CEIX forecasts sales of 22-24 million tons of coal, along with a capital expenditure of USD 100-125 million (excluding the Itmann Mine). The company stated that it contracted 20.5 million tons at an average revenue per ton of USD 42.35 per ton. In FY21, its cost of coal per ton is expected to be in the range of USD 27.0-29.0.

Valuation Methodology: EV/EBITDA Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company’s FY21E trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

CEIX Daily Technical Chart

Stock Recommendation: CEIX's share price increased 112.51% and 139.93% in the past 3 and 6 months, respectively, and is currently trading ahead of its previous 52-week range of USD 3.66 to USD 19.27. The stock is currently trading above its 50 and 200 DMA levels, and its RSI Index is 64.36. We have valued the stock using the EV/EBITDA-based relative valuation methodology and arrived at a target price of USD 16.26. Considering the significant uptick in the stock price, we believe the current share price sufficiently reflects the business fundamentals. We have chosen to remain on the sidelines and will reevaluate the thesis upon further improvement in debt metrics. Therefore, we recommend an “Avoid” rating on the stock at the closing price of USD 19.53, up 3.72% as of July 12, 2021.

* All forecasted figures and Industry Information have been taken from REFINITIV.

* The reference data in this report has been partly sourced from REFINITIV.

Hall Of Fame Resort & Entertainment Company

HOFV Details

Hall of Fame Resort & Entertainment Company (NASDAQ: HOFV) is a resort and entertainment company and owns the Hall of Fame Village which is a premier sports, entertainment, and media venture in Ohio, United States. The company’s operating segments include 1) Sponsorship, 2) Rents and Cost Recoveries, 3) Events, and 4) Hotel segments. The Sponsorship revenues accounted for the majority of the revenue for the company in Q1FY21. As of July 12, 2021, HOFV’s market capitalization stood at USD 346.24 million.

Enhancing Consumer Experience Through Collaborations: On July 09, 2021, HOFV announced a collaboration with Esports Entertainment Group (EEG), an esports and online gambling company. EEG will operate a Helix eSports entertainment center, a dynamic interactive esports complex, and will serve as an official esports provider for the Hall of Fame Village. HOFV expects to monetize the increasing demand for esports activities through the state-of-the-art facility, which is expected to start from H1FY22 and will offer a range of esports activities to gamers.  Similarly, on June 25, 2021, HOFV announced a tie-up with Starbucks for its retail lineup in Constellation Center for Excellence. Starbucks will be tactically themed to exhibit the football craze that runs through HOFV. 

Q1FY21 Results: HOFV reported total revenues of USD 1.92 million for Q1FY21 (ended March 31, 2021) compared to USD 1.96 million in Q1FY20, registering a decline of 2.46% YoY. The contraction of the topline can be attributable to the Sponsorship segment, which lessened due to cancellation and revisions of certain sponsorship agreements, and the Rents and Cost Recoveries segment which reduced due to calling off of many youth sporting events on account of COVID-19. Net loss plummeted 860.18% to USD 126.10 million in Q1FY21 vs USD 13.14 million in Q1FY20.

Key Risks: HOFV operates in the entertainment industry, which suffered a huge hit due to the outbreak of the COVID-19 pandemic. Should this declining trend continue, it will impact the discretionary spending of consumers on entertainment and leisure activities, which in turn could harm the financials of the company. In addition, HOFV faces direct competition from established players in each of its business segments, which could undermine the company's brand image. Furthermore, HOFV’s prospects are dependent solely on the continued success of its partnership with the National Football Museum, Inc., doing business as the Pro Football Hall of Fame (PFHOF), and its ability to sustain cordial alliances with its management. Cancellation or alteration of any agreement with PFHOF could harm the company’s financials.  

 Valuation Methodology: EV/Sales Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company’s FY21E trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

HOFV Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: HOFV’s stock price has increased 86.59% and 39.75% in the past 6 and 9 months, respectively, and is currently leaning towards the lower band of the 52-week range of USD 1.09 to USD 7.64. The stock is currently trading between its 50 and 200 DMA levels, and its RSI Index is 36.08. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 2.93. We have chosen to remain on the sidelines as of now and will reevaluate the thesis upon indications of further recovery of the business from the COVID-19 setback, ramp-up of the Helix eSports entertainment center, and commensurate better visibility on the company’s path to profitability. Therefore, we recommend an “Avoid” rating on the stock at the closing price of USD 3.34, down 8.99% as of July 12, 2021.

* All forecasted figures and Industry Information have been taken from REFINITIV.

* The reference data in this report has been partly sourced from REFINITIV.