Spackman outlook slashed by RHB after film comes up short

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RHB slashed its earnings forecasts for film producer Spackman Entertainment after movie ‘Golden Slumber’ came up light on the gold, but the brokerage still felt the allure of the bright lights.

First-quarter profit “tanked” on the absence of blockbusters, RHB said in a note on Wednesday.

“Spackman’s disappointing first quarter of 2018 was mainly due to the absence of profits recognised from its blockbuster movie, Master, and the underperformance of Golden Slumber,” it said, adding it was the latter that led it to slash its forecast for 2018 profit after tax and minority interests (PATMI) by 33 percent.

That spurred a cut in its target price to S$0.10 from S$0.20.

But RHB stuck with a Buy call.

“With yield-accretive acquisitions done in 2017 boosting the company’s recurring income – while another potential hit, Sovereign Default is set to hit the big screen in the second half of 2018 – we keep our positive outlook, premised on a future comeback,” it said.

Sovereign Default is based on the Korean financial crisis and stars top Korean actors Yoo Ah-in, who is managed by Spackman Media Group, and Kim Hye-soo, the note said.

But it added, “The key risk to our call is the volatility in profitability, as Spackman’s performance depends on the audience’s reception to its movies.”

The stock ended Wednesday down 1.37 percent at S$0.072.