mm2 Asia

mm2 Asia: DBS Vickers initiated coverage on mm2 Asia with a Buy call and a TP of $1.05.

The premier movie producer is poised to ride on the growing demand for local production and will continue to grow its presence in Taiwan, Hong Kong and China.

China in particular, one of the most lucrative movie market, will be key to support growth as Chinese films generally have bigger budgets and better margins than local productions.

Besides movie production and distribution which offers high gross margin of about 40% to 45%,
mm2 recently acquired five cineplexes in Malaysia to create a base for recurring income as well as generate savings in cinema rentals.

As a result, mm2 Asia is expected to grow at an EPS CAGR of 40% for FY15 to FY18.

Based on the house’s TP, the counter offers a potential upside of 36% and it is also trading at an attractive PEG of 0.31x.