mm2 Asia

mm2 Asia | BUY

Aug 15 close: 42 cents

Target price: 62 cents

Broker: DBS Group Research, Aug 15

We continue to expect strong earnings compound annual growth rate of 25 per cent for FY2018-20F, underpinned by growth in production, expansion into the China market, and contribution from UnUsUaL.

The stronger cinema arm, with the completion of Cathay cinema acquisition, helps the group build a recurring income base. Having a strong presence in the entire value chain of content creation and distribution further cements mm2's status as the leader in the media/entertainment industry.

We value the production business at 18 times price/earnings ratio, in line with peers listed in Asia, versus consensus' valuation of about 22 times.

For UnUsUaL, we value it at current valuation. For the cinema segment, we use 21 times price/earnings ratio versus consensus' 20 times.

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