Kronberg im Taunus, 21. Dec 2015 – Hauck & Aufhaeuser, one of Germany´s oldest private bank, have initiated coverage on PANTALEON Entertainment AG (XETRA: PAL, ISIN:
DE000A12UPJ7) with a “BUY” rating and a target price of 104,00 Euro (currently 60,01 Euro).
Hauck & Aufhaeuser Analyst Christian Schwenkenbecher says that with the scheduled launch of its streaming platform PANTAFLIX (PANTA) in Q1 16, PANTALEON looks set to disrupt the traditional and out-dated distribution structures of movies. PANTA is an online streaming platform for video-on-demand content which provides access to non-distributed movies as currently only 10% of global production enters international distribution.
At first place the platform addresses millions of immigrants/expats which alone account for >100m globally. In addition, the platform targets consumers in each country which are interested niche market content from other countries not provided by the large streaming platforms such as Netflix, Amazon Prime etc.
In Hauck & Aufhaeuser’s view, PANTA’s upcoming roll-out is well-supported by the company’s solid and profitable core business currently accounting for 90% of sales which has always been geared towards content generation and production. Not only is PANTALEON’s niche market focus based on strong content quality with artists/producers being key shareholders, the company also holds strong relationships with global brands for which it produces branded entertainment (10% of sales;; i.e. Vodafone). This serves as a solid base for future distribution and content monetisation while at the same time allowing for high visibility of demand and consequently low operational risk with only 3% cash investment but still owning >60% of distribution rights.
For the Analysts at Hauck & Aufhaeuser, PANTA is seen to boost sales and disproportionate earnings growth after the digestion of launching costs, adding a highly scalable business model which should by far outgrow today’s solid core production business (currently 90% of sales, eH&A: 35% of sales in FY 18E). The planned ramp-up in Q1 ’16 explains the substantial acceleration in sales growth of 50% p.a. CAGR ’15-18E to 53m Euro while bottom-line contributions from high-margin incremental sales should become visible from FY ‘18E onwards (c. 80% incremental EBITDA margin).
A potentially successful launch and roll-out of PANTA implies significant value accretion, in Hauck & Aufhaeuser’s view. To capture the appealing future growth potential, DCF valuation is used incorporating a significant risk discount in the terminal year (i.e. 10% terminal EBIT margin vs. avg. >25% assuming a successful roll-out of PANTA in FY ‘20E).
The research coverage can be downloaded here.
About PANTALEON Entertainment AG:
PANTALEON Entertainment AG is a media enterprise mainly focused on theatrical films. PANTALEON Entertainment AG and its subsides are mainly active in the development and production of theatrical feature films, and the exploitation of the rights to those films, mainly through leading international film distributors in Germany and abroad, over all links of the distribution chain. The foundation for PANTALEON Group was laid in 2009 with the incorporation of PANTALEON Entertainment GmbH in Berlin. As of 2015, PANTALEON has established itself as one of the leading German production houses for theatrical feature films and innovative entertainment formats. PANTALEON Group is headquartered in Kronberg by Frankfurt. From its offices in Berlin, Munich and Frankfurt, it has produced a slate of blockbusters, including some of the most successful German films of recent years. For more information, please see www.pantaleonentertainment.com
Disclaimer:
Following information is not a sales offer and does not comprise solicitation of offers to bid on or purchase shares of PANTALEON Entertainment, but serves informational purposes only. This press release may include statements and information about future events, designated by terms such as "will", "want", "plan", "believe","expect", "intend", "anticipate", "estimate" or similar terms. Such forward-looking statements are based on current
expectations and assumptions that can not be guaranteed and carry an inherent risk of change or inacurracy. Actual results achieved by PANTALEON Entertainment can differ widely from expectations expressed herein.
PANTALEON Entertainment AG assumes no responsibility for updating or correcting such forward-looking statements in case of varying results.