in Line With 2H19 Ramp-up Expectations

mm2’s 1QFY19 results may appear light at 18% of MKE/FactSet consensus profit estimates but both the core movie and event production business segments have seasonally weakest revenues during the June quarter. 

Meanwhile, we continue to expect the value creation efforts for the cinema business to be more a 2H19 event. 

We maintain our forecasts and 1x PEG based Target Price of SGD0.57. Maintain BUY. Any production delays or withdrawals are the key risks to our outlook.

Reassurances Given

We attended the post-results briefing where management highlighted:

1. the movie production pipeline remains healthy at 35-40 projects with higher value North Asia continuing to grow;
2. improving metrics for cinema will be more evident in six to nine months; and
3. value realization efforts for post-production subsidiary Vividthree and cinema are on track.

Revenue and earnings momentum will build up in subsequent quarters.

Source: Maybank Kim Eng Research - 17 Aug 2018