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Broker's take: UOB Kay Hian initiates on Cityneon with 'buy'

ACQUIRING a company that developed an Avengers exhibition in Times Square has opened up a whole new world of opportunities for event services provider Cityneon and the company is set for strong earnings growth ahead, brokerage UOB Kay Hian said on Friday.

In a report initiating coverage of Cityneon with a "buy" and a S$0.72 target price, UOB Kay Hian analysts Nicholas Leow and Andrew Chow noted that Cityneon's acquisition of Victory Hill Exhibitions in September 2015 gave Cityneon the rights to use the "Avengers S.T.A.T.I.O.N." and "The Transformers Experience" franchise to open more exhibits based on Marvel comics and Transformers characters.

This is after Victory Hill Exhibitions inked a multi-year deal with Marvel Entertainment in 2013 and spent more than US$8.5 million developing and producing the original Avengers S.T.A.T.I.O.N. exhibition displayed in New York for about 15 months, the analysts said.

They said Victory Hill Exhibitions had high barriers to entry and a scalable business model, adding that their target price's implied FY2017 PE of 11.5 times "could be conservative" given Cityneon's three-year earnings per share compounded annual growth rate of 107 per cent.

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UOB Kay Hian's report on Cityneon came out on Friday, the same day Cityneon was issued a query by the Singapore Exchange. The bourse asked the company to explain its unusual trading volume on Friday morning.

A spokesman for UOB Kay Hian told The Business Times that its initiation report was released before trading hours.

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