SINGAPORE (Aug 16): CIMB Research is maintaining its “add” recommendation on Cityneon with a target price of $1.27 with no changes to its earnings forecasts.
This comes after the group on Monday posted a strong set of 1H17 results on Monday, with $7.7 million in earnings attributable to shareholders of the company for the half-year.
See: Cityneon announces 62.4% rise in 1H earnings to $7.7 mil on higher revenue
CIMB attributes the 1H earnings uptick to the corporate rationalisation exercise which Cityneon undertook in FY16, which brought about estimated cost savings of $1.6 million, as well as 46% y-o-y increase in interior architecture revenue.
In a Tuesday report, analysts Ngoh Yi Sin and William Tng say the results were deemed in line with their expectations, and they expect the strong momentum to sustain over the rest of the financial year as 2H is seasonally stronger for the group.
“With the successful buyout of controlling shareholder Star Media Group and a new board in place, we think Cityneon is better poised to pursue more aggressive expansion plans,” say Ngoh and Tng.
They also opine that the mandatory general offer price of 90 per share is unattractive to Cityneon’s minority shareholders as it is not only lower than their target price, but also represents a 5.3% discount to the counter’s closing share price of 95 cents on Monday.
See: Cityneon announces new board after independent directors advised to reject cash offer
“Successful acquisition of the third IP could catalyse the stock, while we see downside risk from poor take-up of travelling sets,” add Ngoh and Tng.
As at 11:22am, shares in Cityneon are trading flat at 95 cents.
