UFO Moviez India Ltd. share price target

Since our initiating coverage on UFO Moviez India Ltd (UMIL) the stock had touched ~INR 174 (from initiation price of 112) and is currently ~19% up from initiation price. Despite the rally we believe that there is still significant upside potential that warrants a relook.

Immersive Entertainment, Beyond Boundaries.

UFO Moviez reported a weak Q1FY19, in-line with our forecast. This was mainly driven by 12% YoY decline in in-cinema advertisement revenue. We were expecting a weak performance given 1) higher base in Q1FY18 on account of Baahubali 2' and 2) seasonal weakness in the government segment. CARAVAN saw a strong 40% YoY growth. As a result, the over-all advertisement revenue declined by 8% YoY. The merger process with Qube Cinema is progressing as per timelines and UFO Moviez has maintained its expectation to complete the merger in Q3FY19. We largely maintain...

UFO Moviez's Q4FY18 result was a beat to our forecast lead by a strong 69% YoY growth in in-cinema advertisement revenue. We factor the beat and increase FY19/20E EPS for UFO Moviez by 8%/5.6%. However, we factor higher impact on VPF E-Cinema revenue for Qube Cinema and as a result increase our FY19/20 EPS forecast for the merged entity by only 1.3%/2.1%. We now value the merged entity at 7x FY20E (vs. 8x...

We now forecast FY19/20 advertisement income growth of 26%/32.4% vs. 27.8%/32.6% earlier. We fine-tune our forecast for FY19/20E and now forecast EBITDA CAGR of 14% and EPS CAGR of 23%. We continue to believe that the merger with Qube Cinema would be a game...

We cut our FY18/19E EBITDA by 12.8%/13.6%. We introduce FY20 financials and now forecast FY18-20E CAGR of 16%/24% in EBITDA/EPS. UFO Moviez now expects the merger with Qube Cinema to be completed in Q3FY19 vs. Q1FY19 earlier. We continue to believe that the merger would be a game changer for UFO Moviez. We remain confident of UFO Moviez's advertisement revenue growth improving to 27.8% YoY in FY19E and 32.4% in FY20E. Key Highlights and Investment Rationale Continue to believe that merger with Qube Cinema will be a game-changer...

UFO Moviez confirmed that both the segments have started seeing improvement in Q3, especially from the current month. We now forecast FY18 advertisement revenue growth of 15.1% YoY vs. 24.9% earlier. We are confident of growth to pick-up in FY19 to 31.7% (ex-Cube Cinema) on the back of 1) stronger movie content in FY19, 2) improvement in performance of CARAVAN and 3) benefit from UMW deal. The merger with Cube Cinemas is expected to be completed by Q1FY19. We expect...

UFO Moviez Q1FY18 advertisement revenue growth of 24% YoY beat our forecast. So did the over-all revenue growth of 14% YoY, due to higher hardware sales. The latter, resulted in EBITDA margin missing our forecast. However, EBITDA (Rs402, +9.4% YoY) and EPS (Rs5, +83% YoY) was inline with our forecast. UFO Moviez has maintained its FY18 advertisement revenue growth guidance of 30% YoY, in-line with our expectation. We largely maintain our FY18/19 revenue/EBITDA/EPS forecast. We maintain BUY with TP of 690 based on EV/EBITDA of 8x FY19E....

We believe that despite a double-hit Demonetisation and GST UFO Moviez' InCinema advertisement is set for a 30%+ growth in FY18/19. We expect higher impact of GST in Q1FY18 vs. our earlier expectation and forecast a 13.2% YoY growth vs. 19.2% earlier. However, our FY18 forecast remains largely in-tact (-0.5%). Q1 has been between 16.6% and 23% of the full year advertisement revenue in FY15-17 and is 18.8% of our revised FY18 forecast. We largely maintain our FY18/19 revenue/EBITDA/EPS forecast. We maintain BUY with TP of 690 based on EV/EBITDA of 9x FY19E. Key Highlights and Investment Rationale...

UFO Moviez India Limited is an India-based company, which is engaged in providing digital cinema services to exhibitors and distributors of films under E-Cinema and DCinema, and related activities. The Company operates a digital cinema distribution network and in-cinema advertising platform in terms of number of screens. It operates a satellite-based, digital cinema distribution network using its UFO-M4 platform. The UFO-M4 platform provides an end-to-end platform for the satellite delivery of movies...

Over-all revenue growth was a beat due to higher hardware sales. EBITDA margin of 31.2%, 490bps YoY, was a miss. However, EPS of Rs7.1, +7.7% YoY, was a beat aided by lower tax rate. UFO Moviez has maintained its FY18 guidance for a 30% advertisement revenue growth. Given the pick-up in CARVAN business and alliance with United Media Works, we are confident of UFO Moviez achieving the guidance and forecast a 34% YoY growth. We largely maintain our FY18/19 revenue/EBITDA/EPS forecast. We rollover to FY19E and value UFO Moviez at 8x EV/EBITDA (9x FY18E earlier). We maintain BUY with TP of 690 (from Rs675)....

We maintain BUY on UFO Moviez with revised TP of Rs675 based on EV/EBITDA of 9x FY18F. For Q4FY17 we forecast flattish advertisement revenue YoY, impacted by demonetization. We expect this to impact the profitability and forecast EPS of Rs6.5, +1% YoY. However, we remain bullish about the FY18/19 growth in In-cinema' advertisement revenue. This has been reinforced by the recent deal with United Media Works. We await more details on the deal, which would be an upside trigger to our forecast. We factor flattish advertisement revenue in Q4FY17 and cut FY17/18E revenue by 1.5%/1.8% and EPS by 4.9%/5.6%. However, we maintain that UFO Moviez has significant re-rating...

growth was a beat due to higher hardware sales. EBITDA margin of 29.1%, -150bps YoY, was a miss due to one-off costs and higher hardware sales. EPS of Rs4.9, -19.6% YoY, was a slight miss. FY17 advertisement revenue growth guidance of 20% YoY is in-line with our forecast. UFO Moviez now expects Caravan Talkies to achieve cash breakeven in Q1FY18 vs. H2FY17 earlier. We fine-tune our FY17/18E revenue by +2.1%/+2.8% and EPS by +0.5%/2.1%. We maintain that UFO Moviez has significant re-rating opportunity on the back of - 1) healthy earnings growth (we forecast FY16-19E CAGR of 15%), 2) improving RoE (18%+ from FY18E onwards up from 13% in FY16), 3) FCF yield of 7%/9.4% in FY17/18E and 4) net cash B/S....

revenue would ease in Q4FY17. Given the strong movie slate, we expect up-tick in the growth in FY18 lead by growth in both Government and corporate segment driving a 29.2% YoY growth in in-cinema' advertisement. We forecast growth to sustain in FY19 (+31.2% YoY). We now forecast Caravan business to achieve EBITDA breakeven in FY19E. We await management's outlook on this business. We factor relatively slower advertisement growth and cut our FY17E/18E revenue by 3.6%/6.4%. As a result, we cut our FY17/18E EBITDA and EPS by 8.3%/11.6% and 16.3%/16%...

advertisement revenue (32.5% of revenue) grew by 50% YoY. As a result, EBITDA margin improved by 420bps YoY to 34.5%. Further, net profit growth of 23% YoY would have been higher but for higher tax rate. EPS of Rs7.3 was +15.4% YoY. UFO Moviez has maintained its guidance for FY17 advertisement revenue growth of 30% YoY...

UFO Moviez Limited (UFOM) operates a digital cinema distribution network and incinema advertising platform. As part of its distribution business, the company digitises and encrypts movies for transmission in cinema halls, distributes these through its digital platform and also sells or leases digital cinema equipment to theatre owners. In-cinema advertising, a fast-growing business, involves partnering with single-screen or small multiplex players to sell advertising space. As of March 2016, UFOM had a network of 6,699 screens worldwide, including 4,984 screens...