MM2 Asia - DBS Research 2015-10-06: Integrated movie producer

MM2 ASIA LTD. 41C.SI 

MM2 Asia - Integrated movie producer 

  • Provides services over the entire filmmaking process. 
  • Riding on growing demand and support for local production; gaining traction overseas. 
  • New revenue streams to strengthen competitive edge. 
  • Fair value of $0.84 based on 18x FY Mar17F EPS. 

The Business 


Provides services over the entire filmmaking process 

  • Integrated movie producer. mm2 Asia is a leading producer of films and TV/online content in Asia. As a producer, mm2 provides services over the entire filmmaking process – from financing and production to marketing and distribution, thus has a diversified revenue stream. 

Riding on growing demand and support for local production; gaining traction overseas. 

  • mm2 is poised to ride on the growing demand for local production. In Asia and the global scene, mm2 will continue to grow its presence in Taiwan, Hong Kong and China, leveraging on the business relationships it has established. 

New revenue streams to strengthen competitive edge. 

  • Besides movie production and distribution, mm2 has also acquired a 3D animation company and five cineplexes in Malaysia. This will provide a source of recurring income to the group and cost savings in the longer term, as mm2 usually has to pay about 50% of its gross intake for rental of cinemas. 

The Stock 


Fair value of S$0.84 based on 18x FY Mar17F EPS. 

  • At current level, mm2 is trading at 20x FY16F PE and 14x FY17F PE. Its peers are trading at average PE of 26x for FY16F. Taking a 30% discount to peers given its much smaller size, we arrive at a PE target of 18x based on FY Mar17F EPS. Based on this, our fair value works out to be S$0.84 per share, offering potential upside of 27% from current price.

LING Lee Keng DBS Vickers | http://www.dbsvickers.com/ 2015-10-06
DBS Vickers SGX Stock Analyst Report NOT RATED Maintain NOT RATED 0.84 Same 0.84


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