Spackman entertainment (IPO)

Spackman entertainment group is offering 69.4m placement shares (50.0m new shares and 19.4m vendor shares) at $0.26 each, as it seeks to list on the Catalist board. The net proceeds of ~$10.8m will be used for investment into films, M&A’s and JVs, establishment of overseas offices and general working capital. Post-IPO, Spackman will have a freefloat of 17.6%. Spackman primarily produce, present and invest in theatrical films, while also distributing foreign films in Korea. The group’s two film production subsidiaries, namely, Zip Cinema and Opus Pictures, are two of the most recognised film production labels in Korea and have produced some of Korea’s most commercially successful theatrical films for the past seven years. Secondary to its core film business, Spackman also make investments in companies/funds involved in the entertainment industry, operate a cafe-lounge called Upper West and produce documentary programmes for broadcast and cable television. Spackman achieved a net profit of $2.8m in FY13 versus a net loss of $0.2m the previous year, on revenue of $11.9m (+170%). On its prospects, Spackman highlighted that FY13 saw the highest box office revenue and ticket admissions of all time in Korea, with the total number of box office admissions in Korea reaching an all-time high of 213.35m. Concurrently, exports of completed films and film production services to overseas markets also increased by 57.2% from the previous year. Based on the IPO price of $0.26, Spackman trades at 30.8x FY13 P/E and 3.7x P/B with a total market capitalization of $102.8m. While there are no direct peers listed on SGX, we highlight that industry bellwethers, Walt Disney trades at 21.8x trailing P/E and 3.3x P/B and Time Warner at 16.4x Trailing P/E and 2.1x P/B. Spackman currently has no dividend policy. The IPO placement offer closes on 18th Jul ’14 at 12.00 pm, with trading expected to commence on 22nd Jul ’14 at 9.00 am. Prime Partners is the sole sponsor, issue manager and underwriter for the IPO.