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Research: TMT
Mondo’s FY16 results, which were delivered ahead of guidance and show a significant increase in sales from the strategically important Asian market, are a confident step towards delivering its ambitious five-year growth plan. The shares, at the bottom of peers on 2017e P/E, have yet to catch up.
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Mondo TV |
An animated year
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11 April 2017 |
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Mondo TV is a research client of Edison Investment Research Limited |
Mondo’s FY16 results, which were delivered ahead of guidance and show a significant increase in sales from the strategically important Asian market, are a confident step towards delivering its ambitious five-year growth plan. The shares, at the bottom of peers on 2017e P/E, have yet to catch up.
An ambitious growth strategy
Mondo TV (MTV) has a strong position in the market for the production, acquisition and exploitation of the rights to children’s animated film and television content. In October 2016, it unveiled its revised five-year plan, with the ambition to almost triple revenues (+189%), EBITDA (+229%) and net income (186%) by 2021. Investment will focus on higher-growth geographies (China and the Gulf), formats (notably the teen markets), as well as the higher-margin licensing and merchandising activities.
Funding available to execute plan
The funding has been put in place to finance the planned increase in investment. During 2016 Mondo placed €5.3m of equity with GEM and in July 2016, it reached an agreement with Atlas for the issue of up to €15m of convertible bonds. €4.5m were issued during FY16 and year-end debt was €0.7m net of €1.8m in cash. A further €7.5m of bonds have been issued since the year-end, leaving €3m available and, if required (not currently expected), the group has access to the remaining €30m share subscription facility with GEM.
FY16 results a confident step forward
FY16 results were ahead of guidance given last October. A continuation of the strong performance delivered at the interim, FY16 revenues increased 55% to €29.2m (guidance €27.3m), EBITDA of €19.4m was a 109% increase on FY15 (guidance €18.3m) and net profit of €8.6m was ahead of guidance (€8m). In line with the group’s strategy, the mix of sales shifted towards the strategically important Asian market, which almost doubled its contribution to revenues.
Unassuming valuation
Mondo is stepping up its investment in content and infrastructure, at a time when the growth of digital channels and OTT platforms is re-energising the market for children’s brands. While there is dilution risk, the FY17e EV/EBITDA of 5.3x and P/E of 11.4x, at the bottom of its peer group, appear to assume little success despite the recent solid figures and consensus forecasts, which look for 20% and 30% growth in EBITDA in FY17e and FY18e respectively.
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Consensus estimates
Source: Bloomberg |
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Research: Financials
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