mm2 Asia (1B0) – FY19 Results

mm2 Asia (1B0) – Rising revenue but saddled with debt
Price: S$0.24
Market Cap: S$273.26M
Shares outstanding: 1,162.8M
Free Float 43.8% (509.3M shares)
PE: 14X
Yield: N.A
52W High: S$0.460
52W Low: S$0.220

Update post Full year 2019 results
FY19 revenue numbers surged 38.6% to S$266.2M due to full-year contribution from Cathay cinemas and higher sales from 39% owned UnUsUaL. However earnings were impacted by substantially higher financing expenses

FY19 reported profit was propped by a S$4M gain from other income, without which reported numbers would have been worse

A welcome sign was the breakdown on business segment revenue for FY19 vs FY18 results, showing improved EBITDA margins for cinema business, further restructuring may add S$1M-S$1.5M to FY20 EBITDA which will help with paying off financing expenses.

Core production revenue from SG and MY fell, partially offsetting gains in North Asia while 18 months core production pipeline going forward shows S$162M worth of contracts secured.

Past M&A activities have led to debt ballooning, we believe a re-rating of the company will only materialize on events which will lead to substantial deleveraging of balance sheet, returning to a light asset play. Past guidance/potential strategies have been to spin-off or divest cinema or other subsidiaries.

With projected numbers and financing expenses, a re-rating and return to former glory for its share price will be unlikely, therefore we will have to continue monitoring for any M&A which will brighten mm2 Asia’s outlook or potentially face a long & drawn out recovery.

Disclaimer: THIS IS STRICTLY FOR GENERAL INFORMATION PURPOSES & should not be construed as a solicitation or offer to buy or sell any securities. Thank you!

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