SINGAPORE (May 24): DBS Vickers is maintaining its “buy” call on mm2 Asia with 70 cents target price on a strong set of FY17 results.
DBS now expects a 52% CAGR for EPS from FY16-FY19, supported by growth in productions, expansion into the China market, and contribution from UnUsUaL.
To recap, mm2 Asia reported a more than doubling of FY17 earnings of $18.8 million due to better margins. This was 13% above DBS’s expectations.
Revenue came in 149% higher at $95.4 million mainly due to additional revenue generated from its newly acquired subsidiary, UnUsUal, which recorded revenue of $22.6 million, and additional revenue generated from cinema business of $7.7 million.
Revenue from core business increased by 86% to $55.3 million in FY17, whereas revenue from its Vividthree post-production business increased by 36% to $4.9 million in FY17.
Gross profit increased by 146% y-o-y to $45.3 million in FY17, partly contributed by $8.5 million from UnUsUaL, and partly from its new cinema business of $4.7 million.
Gross profit of core business doubled to $26.4 million whereas post-production business increased by 8% to $2.7 million in FY2017. Overall, gross profit margin for FY17 was 47.5%, vs 48% for FY16.
Net cash position in FY17 improved to $14.1 million, from $1.7 million a year ago. On a cashflow basis, mm2 recorded an increase in net cash of about $18.3 million as compared to a net cash decrease of $1.5 million in FY16.
Shares of mm2 Asia are trading at 58 cents.
