Mediacorp deputy CEO quits to join mm2 Asia

After 30 years with Mediacorp, deputy CEO and Chief Customer Officer Mr Chang Long Jong announced that he is quitting the company to join mm2 Asia as its group CEO. As a veteran in the media industry, Mr Chang is probably the best candidate to lead the company through the next phase of growth.

Growth Strategy

  • mm2 is fast expanding out of its roots in Singapore and Malaysia into the North Asia market (Hong Kong, China, Korea and Taiwan). The growth potential is huge given that the production budgets in these countries are much larger.
  • With media and content, mm2 is also seeking to expand its distribution platform and network of producers by acquiring cinemas. In Nov 2016, mm2 proposed to acquire 13 Lotus Fivestar cinemas in Malaysia, which will make it the 4th largest cinema operator in the country. Cinemas typically provide a steady source of recurring income.
  • mm2 plans to list its recently acquired 51% stake in events and concerts management group UnUsUaL in 2017. At a cost of 10x price-earnings ratio, mm2 expects to benefit from a valuation uplift from the IPO. mm2 has already secured 3 pre-IPO investors, including SPH.

Valuation

  • DBS Bank has a BUY rating and target price of S$0.56 on mm2. This represents an upside potential of 15%.
  • Please click here to see DBS research on mm2.

Key Risks

  • Unexpected production delays and budget overrun
  • Dilution in margins as mm2 moves from asset light to heavy with its asset acquisitions