SINGAPORE (July 20): DBS is maintaining its “buy” call on mm2 Asia with a higher target price of 75 cents based after accounting for Golden Village acquisition and expected margin improvement.
DBS says mm2 Asia will be the No. 1 cinema operator in Singapore upon completion of the proposed acquisition of Golden Village cinema chain, expected to be completed by end July.
In a Wednesday report, analyst Ling Lee Keng says the acquisition will complement its current cinema operations in Malaysia, and further cement mm2 Asia’s status as the leader in the media/entertainment industry. With a much bigger and stronger scale, mm2 Asia can now enjoy the synergistic benefits from the entire value chain.
We continue to project mm2 Asia’s EPS to grow at a CAGR of 75% from FY16-FY19, underpinned by growth in productions, expansion into the China market, and contribution from UnUsUaL. The cinema arm, on the other hand, helps the group build a recurring income base.
“We value the production business at 28x PE, in line with peers listed in Asia, vs consensus’ valuation of about 25x. For UnUsUaL, we value it at current valuation. For the cinema segment, we use 21x PE valuation peg,” says Ling.
Shares in mm2 Asia are down 1 cent at 58 cents.
