Brokers' take: DBS initiates coverage on GHY Culture & Media with 'buy'

Michelle Zhu
Published Thu, Apr 15, 2021 · 03:15 PM
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DBS Group Research has started coverage on GHY Culture & Media Holding with a "buy" recommendation and a S$1 target price.

In a report on Thursday, the research team said it likes the mainboard-listed content provider for its strong network of business relationships with key industry players, its healthy content production pipeline, as well as flexible revenue models with end-to-end production capabilities.

The implied price-to-earnings (PE) forward ratios based on GHY's S$1 target price are 19.4 times and 13.9 times for FY2021 and FY2022, respectively. The research team considers this attractive against its projected FY2020-2022 earnings compound annual growth rate of 42 per cent.

"For the key TV programme and film production segment, we peg it to peers' average of 16.9 times PE. For the concert segment, we have benchmarked it to UnUsUaL's PE of 20 times based on historical pre-Covid-19 earnings," stated the research team.

GHY last month announced it was planning to jointly set up a Singapore-based talent management agency with Chinese streaming giant iQiyi. DBS believes this - along with the company's partnerships with other top TV networks and video streaming platforms such as CCTV and Youku - will lead to a projected 40 per cent growth in FY2021 and FY2022 revenue.

The research team is expecting GHY to produce eight and nine dramas over FY2021 and FY2022 respectively, versus six in FY2020.


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"We expect the unleashing of pent-up demand for superstar Jay Chou's concerts once the lockdown is lifted. This should lead to a 46 per cent and 39 per cent earnings growth in FY2021F and FY2022F," said DBS.

It also believes GHY's fixed fee model with progressive payment is "ideal" for cashflow management, with the company's variable fee model offering more potential upside.

"The group's end-to-end production capabilities stand out among peers, and provide better control over costs and quality," added DBS.

As at 2.58pm on Thursday, shares of GHY were trading flat at 75.5 cents.

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