UFO Moviez - Views please

Stock Opportunities Untested - but worth a good look
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http://www.bseindia.com/xml-data/corpfiling/AttachLive/e6bc136e-6181-4d75-8690-8302eff5d3be.pdf
If anyone can make head or tail out of it, please post it here. Looks like company is helping PE funds exist a private investment

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There are total 10000 theatre screens in India, 4000 have UFO system for advertising and another 3400 has qube and remaining other players. So merger will give them wider coverage and pricing power for incimena advertising…

They will also help boost profits in future as growth in new screens is limited. I would say a good strategic decision by management.

Will have to check the price paid in detail to be clear about value creation for shareholders.

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Does anyone understand the rationale for the preferential issue? Why does the company need to raise funds when it has a net cash position? They could easily fund the Qube transaction from the cash on their balance sheet.

UFO is buying shares worth Rs 117 crs from Qube investors & it has gross cash of more than 150 crs.

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Have done some number crunching of the composite scheme and proposed preferential issue to promoters.
excel file attached

views please
regards
UFO Movies.xlsx (14.9 KB)

Disc: Invested since IPO and added further.

3 Likes
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Nice work. From where you took projection about PAT and EBITDA? concall?

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I feel that your work and the detailed maths is credible. The issue is not with the projections, its pretty easy to understand that the whole industry has a good upside potential and can be getting better and better as more innovation happens and overall cinemas become more mainstream after GST.

The issue is UFO’s strategy and path ahead. I believe that the management is competent and can deliver a good growth over the medium term and as long as the technology is not disrupted, grow.

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The projected EBIDTA is just a guesstimate. I am awaiting earnings call and clarity from management about the incremental ebidta due to cost savings, pricing power, volume increase, etc.

the company would have a dominant position as far single screen theatres are considered

regards
Disc: Invested since IPO and added further

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Earnings Call Q3 FY18 Key highlights :-

  • In line with PVR and Inox, Strong Ad revenue growth of ~16% in Q3FY18
  • Growth driven by volume (17% y-o-y) and realization (4% y-o-y)
  • New initiative “Caravan Talkies” (movie on wheels in rural areas) showed impressive revenue (167% y-o-y) growth for 9M FY18 and loss in narrowed down
  • Revenue driven by higher realization per Van
  • Operates 41 Vans in 12 states
  • No of operating screens increased by 5% during Q3 FY18
  • EBITDA marginally margin down due to expense related to Amalgamation

For other companies earnings call summaries - https://quotethemoat.wordpress.com/

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Came across an interesting article on merger of only 2 big players in digital entertainment in India.

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All south films producers decided to stop the screening of regional movies from march 2nd as a protest against the high chargers of digital service providers like UFO and QUBE.

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Can you post the complete article as it’s asking to subscribe

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Every merger in India shall be approved by competition commission of India (CCI). In this case, CCI may not approve the deal as both will have 90% market share approximately after the merger.

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This could be reason for subdued stock price.
Any further info on this issue may please be shared.

Disc. Invested.

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Latest SHP shows Vallabh Bhansahli of enam has increased his stake this qtr from 3 lakhs to 3.6 lakhs
https://www.bseindia.com/corporates/shpPublicShareholder.aspx?scripcd=539141&qtrid=97.00&QtrName=March%202018

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Has anyone received the dividend yet? The effective date was 01/08/2018

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When did they declare the dividend?

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https://economictimes.indiatimes.com/ufo-moviez-india-ltd/infocompanydividends/companyid-45489.cms

In May, they announced

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UFO Moviez, Qube Cinema merger hits NCLT roadblock
Tribunal dismisses merger request, calls the scheme ‘unfair and unreasonable’.

Excerpts

  • setting an example of protecting shareholders’ interest, NCLT has rebuked UFO Moviez India dismissing its “framed” attempt for amalgamation as the dedicated court prioritised shareholders’ worth.

  • “This bench explored all the real intentions and to identify the genuineness, if any, of the scheme. Honestly, the answer is a big NO,” the order said. “Now, we are of the considered view that the Petition deserves no positive consideration and has to be dismissed on all accounts,” the order said adding that judges are not against any business combinations, mergers or any proposition that would make the investors, promoters and shareholders more and more profitable.

The Petitioners, underestimating the prudence and ability of the system, made an intelligent attempt to test the depth of the water by flouting various laws, the judges said.

The scheme, tribunal observed is “intelligently devised to contravene the provisions of Section 68 of the Companies Act, 2013 and is influencing the stock market, which affects public interest”.

It is also observed that the amalgamation of Qube Digital Cinema with UFO Moviez India does not enjoy the support of 53.20% of the shareholders of Qube Digital Cinema Private Limited.

A very damning judgement, personally was a bit disappointed with all the structures and now this confirms. Unfortunately, invested and will look to get out.

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