• Signs term sheet for Marvel's Avengers STATION touring exhibitions in Australia 
• No change in earnings; already assumed VHE to have six exhibition sets by 2017 and eight sets by 2018 
• Four projects announced in Las Vegas, Paris, China and Australia 
• Maintain BUY; TP : S$1.03 

What's new 

Cityneon Holdings announced that its wholly-owned subsidiary, Victory Hill Exhibitions (VHE), has entered into a non-binding term sheet with iLive Entertainment Group (iLive) to host and operate the Marvel's Avengers S.T.A.T.I.O.N touring exhibitions produced by VHE in Australia. iLive will host and operate the exhibition starting in Sydney, Australia. The exhibition is expected to be opened no later than 1 December 2017.

iLive, based in Sydney, is led by the company's Chairman, Mr. Michael Karragiannis and CEO, Mr. John Dion. Mr. Karragiannis was a former Senior Executive at the media mogul Packer's family-owned Consolidated Press Holdings (which controls investments in Crown Resorts, RatPac-Dune Entertainment and other companies). Mr. Karragiannis was also the former CEO of major entertainment companies in Australia, such as ticketing company,  Ticketex and Australia's leading concert arena, Allphones Arena.

Our take 

Rapid buildup of project pipeline. We maintain our earnings forecast as we have assumed that Cityneon have a total of six exhibition sets by end-2017 and eight sets by 2018. These six to eight exhibition sets would enable Cityneon to hold exhibitions in various parts of the world. Only the Las Vegas sets in the U.S. are permanent sets; the rest are travelling sets, and will be moved from one location to another after completion of the exhibition, which usually lasts for a few months. For every location or project, Cityneon would be able to book revenue that includes licencing fees, minimum guarantees on royalties (which is an upfront fee paid by its partners to use the exhibition set built by Cityneon), and also from merchandise sales. Assuming an exhibition lasts for about three to four months, theoretically, a set can be used two to three times per year based on a back-to-back schedule.

Four projects announced thus far. So far, projects that are announced include Las Vegas (for Avengers in May 2016 and Transformers in October 2016), Paris (Avengers, now till Sep 2016), China (Transformers in Dec 2016) and Australia (Avengers in Dec 2017).

Maintain BUY; TP : S$1.03.

Source: DBS Vickers - 6 June 2016