SINGAPORE (April 7): CIMB Research is reiterating its “add” call on mm2 Asia with a higher target price of 60 cents as compared to 52 cents previously, highlighting the counter as a relatively more liquid play on the rising media trend in the region.

In a Thursday report, analysts Ngoh Yi Sin and William Tng note the group’s subsidiary, UnUsUaL Productions, as Singapore’s “leading concert producer and promoter” which aims to expand regionally and develop its only IPs in the form of musicals.

Apart from being a producer of films and TV/online content, mm2 is also the fourth largest cinema owner in Malaysia.

“[UnUsUaL] has overseen over 150 large scale live concerts and 200 events to date, and plans to double its existing 12-15 shows a year in Singapore as it penetrates into other markets like  Malaysia, HK and even 2nd tier Chinese cities that can command bigger budgets,” elaborate the analysts.

Apart from geographical expansion, UnUsUaL is also targeting downstream services such as ticketing platforms and venue management.

“We see potential collaboration opportunities with mm2 in this area, as both companies can leverage on a wider network of international artistes to provide more content offering options. Good content and copyright rights will become more valuable for producers like mm2,” add Ngoh and Tng.

While mm2’s initial stake of 51% in the UnUsUaL group of companies will be diluted to 41.9% upon the latter’s spin-off and listing on the Catalist board of the Singapore Exchange, the analysts believe the stake dilution will be more than offset the $17.4 million raised from the net initial public offering (IPO) proceeds raised via a separate listing platform will set UnUsUaL on a stronger growth trajectory.

(See also: <a href="http://www.theedgemarkets.com.sg/article/unusual-mm2-asia-spinoff-raise-194-mil-ipo-placement">UnUsUaL, mm2 Asia spinoff, to raise $19.4 mil from IPO placement</a>)

CIMB has therefore raised its FY18-19F earnings per share (EPS) estimates for mm2 by 6-14% to account for higher earnings contribution from UnUsUaL, while also adjust for additional capex and borrowings in FY18 as a result of its listing.

Other notable projects in mm2’s pipeline have also been noted by the research house, in particular the group’s recently-announced partnership with StarHub and Astro Malaysia Holdings to produce the Singapore and Malaysia versions of The Voice – as well as the fourth instalment of the Ah Boys to Men local movie franchise.

(See also: <a href="http://www.theedgemarkets.com.sg/article/mm2-asia-starhub-co-produce-voice-singapore-and-malaysia">mm2 Asia, StarHub to co-produce The Voice for Singapore and Malaysia</a>)

“If successful, we expect higher producer bonus and returns from these productions,” say the analysts.

As at 12.23, shares of mm2 are trading 6% higher at 53 cents.

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