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MM2 Asia [1B0.si]
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ThankYou
Supreme |
17-Mar-2021 16:30
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This one got rights also? | ||||
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tongphlp
Supreme |
04-Mar-2021 10:14
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mm2 Asia' s bet on cinemas may be a long shot04 Mar 2021 09:00
By Claudia Tan MAINBOARD-LISTED mm2 Asia is still reeling from the S$230 million acquisition of Cathay Organisation' s eight cinemas three years ago. The deal was meant to provide an additional source of recurring income for the company. Instead, the cinema business is weighing on its bottom line, its balance sheet and its shares. The cinema operations posted a margin on earnings before interest, taxes, depreciation and amortisation (Ebitda) of 12.3 per cent for FY2018 ended March 31. The group' s overall Ebitda margin that year was 33.4 per cent. It fared slightly better the subsequent year, posting an Ebitda margin of 17.4 per cent compared with the group' s Ebitda margin of 29.5 per cent. |
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Joelton
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03-Mar-2021 10:09
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mm2 Asia' s bet on cinemas may be a long shot
MAINBOARD-LISTED mm2 Asia is still reeling from the S$230 million acquisition of Cathay Organisation' s eight cinemas three years ago.
The deal was meant to provide an additional source of recurring income for the company. Instead, the cinema business is weighing on its bottom line, its balance sheet and its shares.
The cinema operations posted a margin on earnings before interest, taxes, depreciation and amortisation (Ebitda) of 12.3 per cent for FY2018 ended March 31. The group' s overall Ebitda margin that year was 33.4 per cent. It fared slightly better the subsequent year, posting an Ebitda margin of 17.4 per cent compared with the group' s Ebitda margin of 29.5 per cent.
Last year, as the Covid-19 pandemic shuttered cinemas worldwide, revenue from mm2' s cinemas for the six months to September shrank to just S$3.6 million - from S$49.5 million in the same period of the year before. The segment also clocked a pre-tax loss of S$16.5 million.
Meanwhile, mm2' s debt load stood at S$264 million at end-September. That gives it a net gearing of 1.1 times.
Since listing in 2014 at 25 Singapore cents a share, the counter has gone as high as 63.5 cents in June 2017. But it has lost 85.3 per cent of its value since announcing the Cathay acquisition in November that year. Shares of mm2 closed flat at 8.3 cents on Tuesday, giving it a market capitalisation of S$96.5 million.
Ticket, stubbed
Now, mm2 is looking to pare down its debt by spinning off the cinema business in a separate Catalist listing - a move that had been on the cards since 2018. The company said a spin-off would enable the cinema business to be " financially independent" and raise the funds required for " new growth opportunities" without relying on mm2.
It is, however, unclear what growth opportunities are present in the market. In fact, cinemas are facing an increasingly grim post-pandemic reality as streaming services continue to strengthen their reign over the entertainment industry.
Even before the pandemic, Singapore' s box-office takings have made little headway while consumer spend on subscription video-on-demand (SVOD) has been recording exponential growth.
According to data from PwC, Singapore' s SVOD revenue grew from S$90 million in 2015 to S$411 million in 2020 with a projected compound annual growth rate (CAGR) of 15.4 per cent between 2019 and 2024. Box-office revenue, on the other hand, dipped from S$260 million in 2015 to S$106 million by 2020 with a projected CAGR of -0.5 per cent from 2019 to 2024.
Covid-19 has struck mm2 another blow, as its cinemas have to halve their usual capacity amid safe-distancing measures while still having to fulfil the usual operating lease commitments. DBS analyst Ling Lee Keng said in a report that losses for mm2' s cinema business are expected to last till at least the second half of FY2022.
To make matters worse, Singapore actually has a higher cinema penetration rate than many other markets in the region (measured by number of cinemas per resident).
It will take a strong backer with deep pockets, appetite for risk and a long-term investment horizon for mm2 to pull off a successful cinema listing.
The company had announced in February that it is in talks with a potential investor, who has expressed interest in taking a minority stake in " one of the group' s core businesses" .
Out of focus
There are, of course, some synergies to owning both film studios and cinemas. And with its control of both production and distribution in the supply chain, mm2 has an opportunity to remake the movie business in its favour.
But in hindsight, mm2 would have been better off focusing on its core business, which includes the distribution and production of motion picture, video and television programmes. Net profits for this segment rose from S$5.1 million in FY2015 to S$22.3 million in FY2019.
Of notable success is the 2018 Taiwanese romance film More Than Blue produced by mm2' s subsidiary, mm2 Entertainment. It was distributed across the region and racked up impressive box-office sales.
More resources could also have been put into co-production in China, which has since surpassed the United States as the world' s biggest movie market.
Co-produced content could potentially give mm2 greater access to the fast-growing market in China through better distribution and revenue sharing models.
Also, in the entertainment industry, content owners wield significant power over distribution venues.
Studios have increasingly opted to bypass theatres to release films online directly, giving consumers fewer reasons to head to the cinemas.
Flash forward
Director Christopher Nolan wrote in a Washington Post op-ed: " Movie theatres have gone dark, and will stay that way for a time.
" But movies, unlike unsold produce or unearned interest, don' t cease to be of value. Much of this short-term loss is recoverable. When this crisis passes, the need for collective human engagement, the need to live and love and laugh and cry together, will be more powerful than ever."
Just as video did not kill the radio star, the rise of streaming will not bring moviegoing to a complete halt. But mm2 will need some fresh ideas to convince investors there is still growth in the cinema business.
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Ximi88
Member |
27-Feb-2021 10:32
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Paying for new shares to acquire new assets versus to pay debts are two different matters. Simply speak, the rights issue is a debt to equity swap, with shareholders taking over the debt in the form of new shares. The rights issue benefit two groups of people more than the shareholders. The first is the $50m bondholders get bailed out. The second is the holders of the $47.85m convertible debt securities. In the event of a cinema IPO spinoff, this second group is given the option to convert the debt to new shares and cash out. So what do shareholders get from coming up with more monies for the right issue? Considering there is no update after 9 Feb, it is highly probable the rights issue is not proceeding smoothly. There is also not much time left for the rights issue. As for the $50m bonds, MM2 has to make an announcement in March to redeem the bonds. Although the dateline is end March, companies usually announce early to assure the bondholders. For the $50m bondholders, they should start to monitor the situation closely.
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Joelton
Supreme |
26-Feb-2021 12:42
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Patience needed before silver screen shines again, says Melvin Ang of mm2 Asia
After months of closures at cinemas island-wide and multiple delays holding back production of even Hollywood blockbusters, mm2 Asia&rsquo s founder and executive chairman Melvin Ang is simply asking shareholders for more time. &ldquo It&rsquo s been a challenging year, not only for our sector but many others as well. I really urge our shareholders to give us a bit of time. We are working very hard to make things happen,&rdquo pleads Ang in an interview with The Edge Singapore.
Ang says an outbreak of a communicable disease has been his &ldquo biggest fear&rdquo since mm2 Asia moved beyond content production with the acquisition of movie theatres, supposedly to form an integrated industry chain.
&ldquo When we acquired Cathay Cineplexes, analysts told us we went from an asset-light business to an asset-heavy business &hellip Today, it has happened,&rdquo says Ang.
To fund the $215 million purchase consideration, the company took out additional loans from banks and drew down on its revolving credit facilities.
On Feb 3, mm2 Asia announced a one-for-one rights issue to shareholders as it seeks to repay its $50 million 7% fixed rate notes, due on April 27. For each existing mm2 Asia share, shareholders are entitled to subscribe to one new mm2 Asia rights share at 4.7 cents each, a hefty 60.83% discount to its Feb 1 closing price of 12 cents each.
If fully subscribed, the rights issue will raise some $54.65 million in gross proceeds. From the proceeds, $51.75 million will go towards repaying the $50 million 7% fixed rate notes and the accrued interest to a US$300 million multi-currency medium-term note (MTN) programme, established in 2018.
In addition, the company announced on Jan 21 that it had secured an extension for the maturity date for the convertible debt securities of $47.85 million, issued on Feb 7, 2018, until the end of the year.
Following the rights issue announcement, shares in mm2 Asia fell to a historic low of 7.7 cents on Feb 10. Back in October 2016, mm2 Asia shares hit as high as 88 cents, after the market reacted positively to Ang&rsquo s plan to build a media and entertainment powerhouse.
&ldquo Some people like the rights issue, some people don&rsquo t. But it&rsquo s about future growth and we&rsquo re taking this seriously. In the interest of our balance sheet, we think it is the best option,&rdquo he says.
At present, paring debt is at the top of Ang&rsquo s agenda though. &ldquo April is not that far away,&rdquo he adds. &ldquo We&rsquo ve always considered the options on how to pay back the MTN. Taking away Covid-19 uncertainty, the rights issue is the most definite, concrete thing that we can do.&rdquo
In support of the rights issue, Ang, who holds a 38.11% stake in the company, will subscribe to his entitlement in the rights issue. That means he will nearly double the number of shares he holds to some 886.3 million units. However, he will not be taking up excess rights shares unwanted by other shareholders.
Tackling the Covid-19 challenge
Indeed, Covid-19 has severely impacted the company&rsquo s financials. In 1HFY2021 ended September 2020, its cinema business contributed $3.6 million in revenue, a fraction compared to revenue of $87.9 million in FY2020.
This was also a sharp fall from FY2019, when the cinema business generated revenue of some $100.7 million, nearly 40% of the company&rsquo s total revenue of $266.2 million.
A year earlier, in FY2018, the cinema business had accounted for $45 million out of $192 million in total revenue.
But Ang maintains that his team is working hard to steer the company in the right direction despite the pandemic. &ldquo Countries are slowly opening up we can do production work in more places now. Our pipeline is strong we have a slate of content to be released in the next 12 to 18 months. We have projects that are fully funded we are in quite good shape.&rdquo
Ang likens running operations under Covid-19 to a game of musical chairs. Among sporadic lockdowns in China, Singapore, Hong Kong, Malaysia and Taiwan, mm2 Asia will stop production work in one location and shift its focus elsewhere. &ldquo Thankfully, our projects are quite spread out. So, it didn&rsquo t affect our pipeline. In fact, our teams are taking this time to fine-tune their projects in the pipeline,&rdquo says Ang.
He is also encouraged by how quickly Chinese audiences have returned to cinemas. &ldquo I&rsquo m happy to see that in China, which has the Covid-19 situation under control, people are going back to cinemas. I would worry if you have good movies and no one is going back, because it proves that the entire position of cinemas has changed.&rdquo
Spin-off, merger among top priorities
As the cinema business is &ldquo probably the worst-hit business segment&rdquo in mm2 Asia&rsquo s stable, Ang also plans to spin it off as an independent business. In December it announced plans for a spinoff of its cinema business for its own listing on the Catalist board of the Singapore Exchange are in the works. &ldquo The IPO of the cinema business is clearly to help our balance sheet. It&rsquo s definitely one of our top priorities,&rdquo says Ang.
Operated via its wholly-owned subsidiary, mm Connect, the company&rsquo s cinema business operates 119 screens in 14 locations in Malaysia and 64 screens in 8 locations in Singapore under the Cathay Cineplexes brand.
In a press release, mm2 Asia said the proposed spin-off will allow its cinema business to be financially independent and raise the funds required for its new growth opportunities, without relying on the parent company for financing or financial support.
In addition, the company believes group debt will more than halve following the rights issue and cinema IPO. Following both corporate actions, mm2 Asia expects total net borrowings will shrink from $253.3 million as at Sept 30, 2020, to a projected $116.4 million. Correspondingly, net gearing is projected to fall from 1.0 times to 0.4 times.
And that wasn&rsquo t all. A week after announcing plans for the separate listing, mm2 Asia announced it was in talks to merge its cinema business with competitor Golden Village. The potential merger partner is the Hong Kong-listed Orange Sky Golden Harvest Entertainment (Holdings) (OSGH), which runs 14 cinemas under the Golden Village brand in Singapore.
Known from 1970 to 2009 as Golden Harvest, the Hong Kong film production company operates a total of 35 cinemas with 285 screens in Hong Kong, Taiwan and Singapore.
In October 2017, Golden Harvest acquired the other 50% stake of Golden Harvest from its joint venture partner, Australia&rsquo s Village Roadshow, granting the company full ownership of Golden Village. This came after a failed bid in June 2017 by mm2 Asia to acquire the Village Roadshow stake, as Golden Harvest withheld its blessing.
According to mm2 Asia, talks of the merger are happening &ldquo parallel&rdquo to the possible listing of the cinema business. &ldquo In the event that the IPO is completed successfully, mm2 Asia and OSGH will discuss in good faith the basis on which the merger and the proposed transaction would take place, taking into account the listed spin-off business,&rdquo said the company in its announcement.
The company added that both sides are discussing the financial terms based on operating figures from FY2019, subject to mutually agreed adjustments. It has appointed United Overseas Bank and other professionals to advise on the proposed spin-off and listing.
mm2 Asia is no stranger to spin-offs. In 2015, the company acquired Vividthree Productions. The following year, mm2 Asia acquired concert producer and promoter UnUsUaL Group before taking itself public in October that same year.
In April 2017, UnUsUaL was listed on the Catalist board. In September 2018, Vividthree, which specialises in virtual effects and computer-generated imagery (CGI), went public as the first &ldquo immersive digital content production&rdquo company listed on the SGX.
In fact, one such CGI done by Vividthree for Pavilion Kuala Lumpur shopping mall for the recent Lunar New Year has been making its rounds on social media. It depicts a bull being spray-painted in gold behind a glass enclosure, before the animal charges forward, shattering it.
Interest from private equity and regional expansion
On Feb 7, mm2 Asia announced that it has received a non-binding term sheet from a private equity investor expressing interest in a potential acquisition, involving taking a minority stake in one of its core businesses. Neither the investor nor the exact business area of interest has been identified. When asked, Ang declined to comment further, citing how this latest development is still at a &ldquo very preliminary stage&rdquo .
&ldquo The term sheet, if entered into, would provide the investor with an exclusive period of 90 days to conduct a preliminary due diligence exercise, and for parties to prepare and negotiate the terms of the binding investment agreements,&rdquo read the announcement.
Looking ahead, Ang is confident of pent-up demand for film among the region&rsquo s markets. Aside from the booming film markets of Hollywood, Bollywood and China, Ang says mm2 Asia is trying to set up shop in South Korea and Thailand. &ldquo We have already been working with people there for licensing rights, but we want to start a presence there, to do some real content development.&rdquo
Presently, mm2 Asia&rsquo s core business in content production and distribution has a strong pipeline of 26 projects valued at $99 million running till the end of FY2022, higher than previous years. According to DBS Group Research analyst Ling Lee Keng, financing has been secured for the bulk of these projects.
&ldquo With the increasing demand for more content by various streaming platforms in Asia, the group targets to derive 40% of the content production revenue from streaming channels by FY2022,&rdquo adds Ling. In her Feb 19 note, Ling upgraded the company to &ldquo hold&rdquo from &ldquo fully valued&rdquo but with a lower target price of 8.9 cents from 13 cents last November.
Whatever the case, Ang is thankful to mm2 Asia&rsquo s shareholders for sticking with the company. &ldquo I would like to thank the shareholders they have been very supportive. Although some have already divested their shares in the company, I also want to thank them,&rdquo says Ang.
For now, he hopes cinephiles and shareholders alike are as excited as he is about the year ahead. &ldquo Give us time. We are on the right track. Wait and you&rsquo ll see more."
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genting^2
Master |
19-Feb-2017 22:57
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Anyone holding? | ||||
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genting^2
Master |
12-Feb-2021 20:22
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https://www.straitstimes.com/singapore/singapores-economy-able-to-bounce-back-this-year-but-some-sectors-will-take-longer-pm-lee |
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genting^2
Master |
09-Feb-2021 09:35
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https://www.media-outreach.vn/View/57716/orange-sky-golden-harvest-and-mm2-asia-to-merge-cinema-businesses-in-singapore-and-malaysia | ||||
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Sgvale
Supreme |
09-Feb-2021 11:58
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Will be like Spackman. | ||||
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Joelton
Supreme |
09-Feb-2021 09:16
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mm2 Asia tumbles 30.8% after news of potential investor, proposed rights issue
SHARES in mainboard-listed entertainment group mm2 Asia sank more than 30 per cent on Monday, as the market began to price in a potential new investment, as well as a proposed rights issue.
This comes a day after the group announced that a Singapore private equity investor is interested in investing in one of its core businesses, without specifying the business area.
The news also comes shortly after mm2 Asia announced that it had, on Feb 2, received in-principle approval for a proposed renounceable underwritten rights issue.
The rights issue aims to raise net proceeds of about S$52.2 million, to be used to pay off the medium-term note due on April 27, 2021, and for general working capital and operations. The issue price of 4.7 Singapore cents for each rights share represents a 60.8 per cent discount to the counter&rsquo s Feb 1 close of 12 cents, and a 43.7 per cent discount to its theoretical ex-rights price of 8.35 cents based on its Feb 1 close, being the last trading day prior to this filing.
The counter finished at a record-low of 8.3 Singapore cents on Monday, down 3.7 cents or some 30.8 per cent, with about 13 million shares changing hands. No married deals were recorded for the day, according to ShareInvestor data.
mm2 Asia had called for a trading halt on Feb 2 " pending the release and finalisation of a material announcement" , which was extended till the end of Feb 5.
In a bourse filing on Sunday evening, mm2 Asia said it has received a non-binding term sheet, expressing interest in a potential acquisition involving taking a minority stake in one of the group' s core businesses.
" The terms of this term sheet are being deliberated by the board, and the term sheet has not been entered into as at the date of this announcement," it said, adding that the board may also appoint an independent financial adviser if deemed necessary.
mm2 Asia also noted that confidentiality undertakings prevent it from disclosing the investor' s identity or other proposed terms at this stage.
The group' s core business is in content production and distribution, including film, television and online releases. Apart from its core business, other business segments include cinemas, concerts and events, and post and digital content production. Catalist-listed Unusual Limited is the events-production unit of mm2 Asia.
In addition to Singapore, mm2 Asia also has a presence in Malaysia, Hong Kong, Taiwan and China. Over the years, it has produced or co-produced and/or distributed more than 20 movies, according to data from the Singapore Exchange (SGX). Some of its notable productions include Ah Boys to Men, which was directed by local filmmaker Jack Neo.
In Sunday' s announcement, mm2 Asia said the term sheet - if entered into - would provide the investor with an exclusive period of 90 days to conduct a preliminary due diligence exercise, and for parties to prepare and negotiate the terms of the binding investment agreements.
For the deal to proceed, terms of the term sheet would need to be finalised, approved by the board, and entered into by all parties. Any potential transaction would also require the binding investment agreements to be negotiated and finalised, with further conditions to follow, including shareholder approval.
There is no certainty that the investment transaction would proceed, nor whether the discussions will result in binding agreements, said mm2 Asia.
The group added that it is making the announcement " to keep its shareholders and stakeholders informed on the developments in its business and on possible corporate actions, particularly in light of the company' s proposed renounceable underwritten rights issue" .
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genting^2
Master |
09-Feb-2021 09:11
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https://www.theedgesingapore.com/capital/company-news/mm2-asia-tap-shareholders-5215-mil-1-1-rights-issue | ||||
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genting^2
Master |
09-Feb-2021 09:08
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MM2 focus is in Malaysia n Singapore. Most of the new titles are screened at Theatres before they move on to netflix. I think MM2 is more affected as they have more cinemas in Malaysia (due to MCO) than in SIngapore . Things will normalise once the pandemic is over. Futhermore, a lot of the movies MM2 is involved are also screened in China and other regions. |
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n3wbie
Elite |
09-Feb-2021 01:03
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Closing price today was effectively just under the theoretical ex-rights price of 8.35c (close was 8.3c). Question is given that the cinema industry is heavily disrupted by Covid-19 with people turning to online platforms, Netflix etc to consume entertainment, how would this turn around? | ||||
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Ximi88
Member |
08-Feb-2021 20:54
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There is no further update. The norm in such situations is for the company to make more announcements on the rights issue,. As for the potential investor, it amounts to nothing much as it a non binding EOI.
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look@bright
Elite |
08-Feb-2021 12:22
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Hot stock: mm2 Asia sinks 17.5% after news of potential investorwww.businesstimes.com.sg/companies-markets/hot-stock-mm2-asia-sinks-175-after-news-of-potential-investor |
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Observers
Elite |
08-Feb-2021 11:23
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is it underwritten? | ||||
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boonlaysg
Member |
08-Feb-2021 08:28
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good entry price? | ||||
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commando
Master |
08-Feb-2021 07:05
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Open today..
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Sgvale
Supreme |
07-Feb-2021 21:09
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Will the border reopen tomorrow. With the Rights so cheap. Hiow ah ?
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Ximi88
Member |
07-Feb-2021 10:38
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This proposed rights issue is an indirect debt to equity swap. It is like magic, tink tink, the $50m debt disappears and end up as equity with shareholders. Besides the$50m bond maturing on 27 Apr 2021, there is another debt, a convertible debt securities amounting to $47.85m, due 7 Feb 2021. Briefly speak, this convertible debt securities was issued in Feb 2018, shortly after the acquisition of Cathay cinemas. The holders of the convertible debt securities are given the option to exchange the debt with the shares of the cinemas business. As the cinemas IPO has not happened yet, this convertible debt maturity date has been extended to 31 Dec 2021. At this point of time, the shareholders are owners of the cinemas and not the holders of the convertible debt. Thus for the rights issue, shareholders should at least insist that they get back their $50m with interest first in the event of a cinema IPO. In this way, Melvin can also get back his $21m.
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