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mm2 Asia - DBS Research 2016-06-10: Proposed listing of UnUsUaL Group

mm2 Asia - DBS Research 2016-06-10: Proposed listing of UnUsUaL Group MM2 ASIA LTD 43D.SI 

mm2 Asia (MM2 SP) - Proposed listing of UnUsUaL Group

  • UnUsUal acquired at 10.2x PE
  • Separate listing enables mm2 to crystallize gains and to unlock value
  • UnUsUal to tap on public funds for expansion
  • Maintain BUY on mm2, TP: S$0.75



What’s new

  • mm2 Asia announced that its subsidiary, UnUsUal, has appointed professionals to prepare them for listing on the Catalist board of the SGX-ST.


Our take


UnUsUal acquired at 10.2x PE. 

  • mm2 acquired a 51% stake in UnUsUaL Group for S$26m back in February 2016. 
  • UnUsUal Group is one of Asia’s largest promoters and organisers of shows and entertainment acts. The acquisition comes with a net profit guarantee for three years at S$5m per year. This works out to a PE of about 10.2x. 
  • UnUsUal contributes about 15% to group earnings, based on our forecast of S$17.8m for mm2 in FY17F.

Unlocking value. 

  • A separate listing for UnUsUal would enable mm2 to crystallize gains and to unlock value, and allow UnUsUal to tap on public funds for expansion.

Assume UnUsUal list at a discount to mm2 valuation. 

  • mm2 is currently trading at 19.7x FY17F PE and 16.3x based on FY18F earnings. Assuming UnUsUal lists at >10x PE but at discount to mm2’s valuation as mm2’s business is more diversified, mm2 would be able to realize gains on its investment. We tabulate our assumptions below :

  • The proceeds from the stake sale of about S$8m to S$14m based on our assumptions, if materializes, would enable mm2 to embark on its growth path to propel to greater heights. Potential gain could range from about S$3m to S$6m if the sale materializes. One of the growth areas is China. The group has already co-produced several productions in China since 2013 and is currently working on a few movies there. Chinese films generally have bigger budgets and better margins than local productions.
  • Even if mm2 decides to retain its 51% stake in UnUsUal, the Group would still be able to realize book value gains if UnUsUal is able to list at >10x PE.
  • Maintain BUY on mm2, TP: S$0.75.




LING Lee Keng DBS Vickers | http://www.dbsvickers.com/ 2016-06-10
DBS Vickers Analyst Report BUY Maintain BUY 0.75 Same 0.75


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