DBSV continue to have "buy" rating on mm2 with increased TP of $0.73 from previous $0.60. My opinion is this acquisition is nice if done properly. I have been visiting Cathay cinemas more routinely this year due to Marvel, DC and Star Wars movies haha.. compared to GV, personally I would prefer Cathay than GV cinemas. It is time to monitor this counter again
i only know Cathay was privatised at abt $27 million back in 2005.
Now they sold their cinemas for S$230 million in a all cash deal. Cathay really benefited.
If u read the announcement, the EBIT will be abt S$21 million for FY2017.
Valuing the cinema business at 11x PE, way below MM2's 42x PE.
Let's estimate here.
MM2 currently has 75 million cash as of 1QFY2018. The announcement mention the source of fund for acquiring will be internal resources ( 75 million cash in hand ) and borrowings. Assuming MM2 borrows $155 million ( $230 million - $75 million), with a borrowing rate of 5% interest. MM2 will incurred a 7.75 million finance expense.
Assume tax expense is 20%, Cathay will contribute $16.80 million of earnings after tax, and $9 million earnings after taxes and interest expenses.
Assume profit is on par with FY2017's net profit of $18.76 million, total earnings with Cathay, will be S$27.76 million, or EPS of S$0.0264. At 56cts, it is trading at a forwarded PE of abt 21x.
Summary:
1) PE will drop after Cathay's business is integrated into mm2
2) Assume profit for mm2 FY2018 is on par with FY2017, mm2 is worth abt 21x PE .
*Disclaimer: Hope i never assume anything wrongly, or calculated wrongly.
Can't attach new attachment to my previous comment so this is MBKE's insight on mm2.
DBSV continue to have "buy" rating on mm2 with increased TP of $0.73 from previous $0.60. My opinion is this acquisition is nice if done properly. I have been visiting Cathay cinemas more routinely this year due to Marvel, DC and Star Wars movies haha.. compared to GV, personally I would prefer Cathay than GV cinemas. It is time to monitor this counter again
Reply to @supertort : Hope so.. once they start paying dividends, it’s time to buy
i only know Cathay was privatised at abt $27 million back in 2005.
Now they sold their cinemas for S$230 million in a all cash deal. Cathay really benefited.
If u read the announcement, the EBIT will be abt S$21 million for FY2017.
Valuing the cinema business at 11x PE, way below MM2's 42x PE.
Let's estimate here.
MM2 currently has 75 million cash as of 1QFY2018. The announcement mention the source of fund for acquiring will be internal resources ( 75 million cash in hand ) and borrowings. Assuming MM2 borrows $155 million ( $230 million - $75 million), with a borrowing rate of 5% interest. MM2 will incurred a 7.75 million finance expense.
Assume tax expense is 20%, Cathay will contribute $16.80 million of earnings after tax, and $9 million earnings after taxes and interest expenses.
Assume profit is on par with FY2017's net profit of $18.76 million, total earnings with Cathay, will be S$27.76 million, or EPS of S$0.0264. At 56cts, it is trading at a forwarded PE of abt 21x.
Summary:
1) PE will drop after Cathay's business is integrated into mm2
2) Assume profit for mm2 FY2018 is on par with FY2017, mm2 is worth abt 21x PE .
*Disclaimer: Hope i never assume anything wrongly, or calculated wrongly.
Reply to @Liang_Soon_Fong : Thanks for sharing.