First class interim results
top line growth 74%, yet costs only up 24%
they will have the best part of 700k cash at year end

corporate synergy note suggest eps of 2.09p for the year , current share price 17p

dollywood contract very likely
more parks very likely
no debt

LOQ must be one of the best risk reward plays out there

Possibly talking to myself here but here goes anyway. Some predictions for this and next year. Last weeks announcement confidently suggests turnover of 10 million and profits of 1.4 million for this year. (they will already have 90% of income in the bank as June July and August account for that). With 600k already in the bank they will have 2 million in cash by year end

Their job adverts for managers in California suggest MAgic mountain is an addition for 2009. I expect Legoland California to also sign up plus possibly an asian park.


Gross margins are 30% and each decent park should add 1 million to turnover and 300 000 to profits. I suggest organic growth of 5% in parks (higher prices, moreqbots etc) for 2010.

So for 1 additional park I expect
10million x 1.1 x 1.05 = 11.55 x 30% margin = 3.465 million profit less 1.6 million fixed cost = 1.865 million profit next year.

With extra parks = 10 x 1.05 x 1.3 = 13.65 million x 30% margin = 4.1 million - 1.6 million fixed cost = 2.5 million.

So market cap 4.3 million, 2 million cash in the bank and projected 2009 profit of 1.8 to 2.5 million dependent on park sign ups. 13p t0 18p a share

Still multibag territory and my target price 80p to 140p a share. Current price 30p

dollar now 1.68 to the pound instead of last years average of 2 dollars . great news for loq

massive news on six flags conference call tonight which hasnt hit the market yet

THE CEO OF SIX FLAGS HAS STATED
"WE HAD 1 MILLION MORE USERS OF FLASHPASS THIS YEAR" AND "WE INTEND TO ROLL IT OUT TO TWO MORE PARKS NEXT YEAR"

so average price per person on flashpass is 17 dollars, so lo-q will have earnt 17 million dollars in revenue which is about 10 million pounds. Gross margin is 22 to 25% so a minimum of 2.2 million extra profit. I reckon lo-q will make 2.5 million on a market cap of only 3.5 million.

If you google six flags conference transcript you will find it

FROM TRANsCRIPT;
Lo-q spelt lowq but never mind
Analyst

It seemed as if there was a slight acceleration in per guest spending excluding sponsorships from the mid-August update that you gave, through the third quarter now, and was there a discernable change in your guests behavior as gas prices fell during September and October?

Mark Shapiro

No, not at all. We were really strong all summer long. The other thing that benefited us, we nailed the stimulus package. We saw the stimulus package was coming. Those checks as you know are sent out over really a four-week period maybe longer, and we knew it was coming and people would have more money.

We didnt think people were going to go spend it immediately like they had during the last recession, they might put it in a bank, they might use to pay off bills, if they were smart theyd put the cash under their mattress for todays climate, but maybe they were going to spend some of it.

And in the hopes that they would spend some of it, we doubled our advertising spend for four weeks during the economic stimulus distribution. And that paid off for us and then when the people came into the parks on good weather, they stayed long and they spent and that really helped us out.

The big brand strategy has clearly paid off for us and I would tell you as well, [Low Q] which is the company that does our flash pass system, theyre unbelievable. They really drove our business and their numbers were up significantly year-over-year. In fact theyve been up significantly year-over-year since the year I arrived and we began to expand the usage of our flash pass system in all of our parks.

We had one million more people use the system this year then last year and you remember flash pass is what gets you a premium and you get an electronic device that brings you to the front of the line so you dont have to wait in line.

And because of the positive response were seeing, were planning to install in another two parks next year so that nearly every Six Flags park will have the system and flash pass works because really it drives revenue in two ways. One the premium they pay for the flash pass, so the revenue is generated that way. And then of course, by not being trapped in line, the guests spend so much more time moving about the park, enjoying other facilities, spending and giving us further revenue in those ways.

So that was a big driver of our guest spending this year as well.

up 40%

Lo-q announce profits of at least 1.85 million. AT least 2 new parks for 2009 season. Dollar likely to be at 1.5 instead of the 1.8 weighted average this year so another 15% benefit there. Profits next year to be at least 2.5 million pounds IMO. MArket cap still under 6 and they are sitting on 2.5 million of cash so strip that out and PE is just 2 to 3 on a share which has grown profits by 300%

moved up nicely from an initial tip price of 17p to 38p. 3 new parks already announced for 2009, plus rumours of 1 more for next year. Forward PE should be just 1 with dollar benefits. Still see thsi as a 100p stock this time next year. Does any one read this or are the markets so bad nobody is here

update due next week. Could hit 50p imo

You are not alone, I have just added this to watchlist.

Trading update today confirms the two previous ones, so we should see PBIT at no less than 1.85m.They are being sensible saying that actual trading will be governed by peoples willingness to continue to visit theme parks. LOQ said the same with the interim report in August 2008, but remained unaffected, so lets hope we see the same this year.

also indicated a few more european parks on the way before easter opening weekend

6 parks which LOQ does circa 80% of its business with, has approx 2 billion debt.

Do you not see this as a risk?.

partly but loq get there money first and its a huge cash cow so with at least one more summer company should have whole markt cap in cash. You can buy 400 million of that debt for 40 million so I see a renegotiation of this debt very likely.

I also see six flags slimming down to the highly profitable core parks of which six flags are in all of them. They can jettison the other for land values clearing a big portion of the debt.

another significant park signed up and parent company have 19 sizeable parks across the world.

This co trumpeted its device and yet it's never caught on here, where we like to queue!
Elsewhere the sp has risen on the back of some (US-) sign-ups but I'm doubtful in these economic days - aren't Parks just trying to make better use of limited resources - without investing in something expensive? . . . . at least until the crowds come back... ... . ... . . If LoQ's turnover is based on users, this could still be a poor year, despite new signings.

the thing to note is that it isnt expensive - an installation typically costs a park 70 000 all in. Wireless architecture is cheap, qbots now made in bulk are cheap. Now think about the payback. Dreamworld are charging about a fiver a person, average 4 people per qbot so 20 a use. There are 500 on site and they regularly sell out so thats 10 000 A DAY!! PArk get half of it so 5000 a day. Direct Cost of sales to parks , about three employees at 50 a day so its massive margin. Payback would typically be less than two months. This is why six flags love it so much. Also theme parks are relatively recession resident. New cars, expensive holidays etc go first. If anyone with a young family will tell you you just have to find things to do during the school holidays to maintain your sanity!!!

btw legoland windsor has been a huge success. Id hope drayton manor is close too.

What did you first buy these at Glenn? I've been watching since 5p and finally bought some today at 40p. Kinda sick, but other than OCZ which is valued at 20% of net assets and also a young growing company (delisting from AIM in order to get US listing though), I couldn't find anything else which had the potential to make 200% in the next 2 years.

Agree that theme parks are recession-resistant. People will still visit. But might have to reduce prices of the system as this would be the first cost-cutting measure for visitors. If a family wants to save 20 on the day, then the Qbot will be sacrificed.

Still like the risk/reward though. Company knows what it's doing. Could be a mass market in a while and able to charge maybe a couple of pounds per reservation.

bought 2000 at 106p years and years ago. Sold out on the wy down at about 70p. The bought various big parcels at 3p 6p 9p 12p. ALtogether hold about 290 000 at average of 7p

WOW! Nicely done Glenn. Especially the hard decision of cutting losses at 70p. 2000 sold there was 20000 bought at 7p!

Like I say, finally dipped my toes in at 40p today. It's a long-termer for me. Might well have timed my buy too early as there is a profit-taker out there. But I reckon I'll be in profit when results are out in a few weeks. Hopefully that'll generate some new interest and drive the price higher. 120p in 2 years would be great :-)

I still like this company, and good see contract win with Parques Reunido in Italy who have 67 parks across Europe. I would love to buy into loq, but not until we can see more contract wins and become less dependent on Six Flags. The debts need to be sorted out here, I believe they were downgraded again at the end of February.

I'm sure loq are a good investment at 40p, but I will wait first for either more contract wins away from Six Flags, or positive news re Six Flags Debts.