Since hitting the high of $1.23 in October 2017, shares of Cityneon Holdings (Cityneon) has corrected over 20 percent to the current $0.97. Prior to its huge share price run-up, Cityneon added yet another intellectual property rights (IPR) for blockbuster franchise, Jurassic World.
Under its stable, Cityneon also holds IPR and exhibition licenses for Marvel’s Avengers S.T.A.T.I.O.N and Transformers Autobot Alliance. All the three blockbuster franchises are iconic films for avid sci-fi movie fans. Nonetheless, valuation of Cityneon ran ahead of fundamentals and it traded at 35 times its trailing-12 months earnings at its peak last year.
But that does not mean Cityneon is a bad stock. In fact, the group executing pretty well on its exhibition operations and revenue has been growing again since FY13. In 1H17, Cityneon’s revenue was up 7.3 percent at $49.7 million but what is more impressive is that the company managed to boost profit by 63.8 percent to $7.7 million, mainly due to improvement in gross margin which rose from 39 percent in 1H16 to about 46.9 percent in 1H17.
What is exciting about Cityneon is that it is staging more exhibitions in other geographies such as Russia and China. On one hand, being less land-scarce means that Cityneon can hold more massive exhibitions while the other, other geography markets are larger. For instance, Jurassic World exhibition received in excess of one million visitors in the twelve months leading to September 2017.
Currently, based on current share price of $0.97, Cityneon is trading at a trailing 12-months price-to-earnings of about 25 times. The valuation is not exactly cheap, but it is still significantly lower than when it was at the top. On a side note, we hope Cityneon’s operations in the US would benefit from Trump’s tax cut, which should give it an added boost to its earnings.
For a stock that is seeing decent growth in business, this correction might just be the opportunity for prospective investors to accumulate on Cityneon.