• Cityneon launched 3-year exhibition for Transformers in Jeju Island, Korea.
• Longer term contract provides earnings visibility; not stopping at four IPs.
• Cut in number of exhibition sets; earnings forecast reduced by 11-15%.
• Maintain BUY; Target Price tweaked lower to S$1.57.

Longer Term Contract Provides Earnings Visibility

The launch of the 3-year exhibition for the second set of Transformers in Korea, after a 2-year contract for the first set in China indicates that a longer term contract is likely to be the trend going forward. This model enables Cityneon to lock in revenue (in terms of licensing fee) for a longer period and provides earnings visibility for the group.

We continue to expect Cityneon to deliver explosive FY17-19F EPS CAGR growth of 131% based on the current four IPs - Avengers, Transformers, Jurassic World and The Hunger Games - and its Traditional business. 

Source: DBS Research - 06 Aug 2018