Alibaba Pictures Group Ltd In Focus

(10th Dec, 2015)
Alibaba Pictures Group Ltd (S91)
(10Dec2015) close: S$1.75
Target price: S$2.30
1.)   Sector: Film Company (Consumer Cyclical)
2.)   Core business structure: Production and distribution of film and TV copyrights, TV programme packaging services, Agency services and Mobile value-added services.
3.)   Segment that generates the highest revenue: Production and distribution of film and TV copyrights contribute 91.1% of the group total revenue.
4.)   Countries that the business operates: Hong Kong, China, Singapore.
5.)   Challenges: Fierce competition from western film distributors in mainland China. Drop in the income from TV commercials. Just taken over by the Alibaba group in May, 2014 and might need more time for coordination among shareholders.
6.)   Strengths: Entered agreements with filmmakers and strategic partnership with companies in the sector. For example, Mr Wong Kar Wai and Mr Peter Chan. Also, organisations like Hengdian Chinese Film Industry Park and the Hong Kong based film Production Company block 2.
7.)   Significant events: In 2004, the company announced their plan to adopt a C2B leveraging on its expertise in big data to create an e-commerce platform which promotes and distributes various cultural products. It plans to invest in making 8-10 movies and 3-5 TV series in the upcoming two years.
8.)   GTI Ranking(last column): NA
9.)   TABLE:
10.)  Recommendation: Hold.
The Chinese film industry is expanding rapidly giving opportunities for the group to thrive. There is also a steady and continuous progress of the film making and distributing business as more quality movies are launched over the years and one recent example is Mission Impossible. With the robust partnership with well-known actors, directors and film making companies as well as its expertise in big data and e-commerce platform, the group seems to have a bright future. However, one thing to take note is that the stock is priced purely on speculation about its future prospects, if we based on its past performance to exercise our judgement, it is not difficult to conclude that its business was underperformed. 
DISCLAMER: Readers should not rely solely on information published and should seek independent financial advice prior to making any investment decision. The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.

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