CFA Society Singapore
SINGAPORE (Nov 11): RHB is keeping its “buy” call on Spackman Entertainment Group” at a target price of 22 cents, with the view that the stock’s outlook is currently at its best since its initial public offering (IPO) in 2014.
This comes after the entertainment production company on Thursday posted 3Q16 earnings of US$1.5 million ($2.1 million) compared to its loss of US$1 million a year ago.
“We expect upcoming quarters to see crucial turnaround for the company, as it would enjoy cost savings of c. 70% on its general and admin expenses post the disposal of Opus Pictures,” comments analyst Jarick Seet in a Friday report.
The divestment of Opus Pictures, the group’s loss-making subsidiary, should be an impetus for Spackman to bounce back into profitability in FY17, he adds, especially since its other production house, Zip Cinema, has a good track record and aims to produce 1–2 movies per annum.
“Coupled with Spackman’s joint ventures (JVs) to produce other movies, these factors should spur growth going forward,” predicts Seet.
Furthermore, he reckons Spackman’s new movie, ‘Masters’, will contribute to the group’s 4Q16 net profit after tax following its release on Dec 22 this year.
“Our expectations of 7.5 million in ticket sales would yield profits of US$5.6 million and bring the company back into the black,” says the analyst.
As at 3:09pm, shares of Spackman are trading 2.22% lower at 13 cents.