Cityneon started at ‘buy’ by UOB KayHian with 72 cents target price
http://www.theedgemarkets.com/sg/article/cityneon-started-‘buy’-uob-kayhian-72-cents-target-price
SINGAPORE (April 15): UOB KayHian has initiated coverage of Cityneon, the exhibition and distribution company, with a “buy” and target price of 72 cents.
In a Friday report, analyst Nicholas Leow said the company is poised to ride the wave of Avengers and Transformers blockbuster movie titles.
“Together with Victory Hill Exhibitions’ (VHE) relationships with big name partners such as Hasbro Inc, Marvel Entertainment and The Walt Disney Company, Cityneon is well positioned to grow as it embarks on entertaining a generation of superhero fans,” says Leow.
After the acquisition of VHE in Sept 15, Cityneon went on to acquire the rights to use the Avengers S.T.A.T.I.O.N and The Transformers Experience franchise to open exhibits that immerse audiences in the world of Marvel Comics and the Autobots.
Leow says the business has high barriers of entry through established customer relationships and advanced technology.
He also considers the VHE model to be highly scalable as its earnings performance is correlated with the number of sets that the company has.
“We forecast Cityneon will deliver an explosive adjusted 3-year EPS CAGR of 107% in 2015-18,” adds the analyst.
There is also a strong pipeline of movies all the way to 2020.
“Marvel has already planned its movie releases all the way to 2020 and beyond. Transformers on the other hand, is a relatively newer franchise as the first Transformers movie was only released in 2007 and since then there have been four movies with another four planned till 2019,” says the analyst.
At 2.37pm, Cityneon shares are up 10.1% at 54 cents.