Singapore Company Focus

Cityneon Holdings
Bloomberg: CITN SP | Reuters: CNHL.SI Refer to important disclosures at the end of this report

DBS Group Research . Equity 30 May 2016

BUY Marvelous transformation

(Initiating Coverage) • Creator of innovative and interactive exhibitions, with
Last Traded Price: S$0.74 (STI : 2,802.51) the acquisition of VHE
Price Target : S$1.03 (39% upside)
• Scalable business model with low execution risk
• Potential for third IP, and to tap on other Walt Disney
Potential Catalyst: Securing third IP
characters
Analyst • Initiate with BUY, TP: S$1.03
LING Lee Keng +65 6682 3703 leekeng@dbs.com
Singapore Research Team Click here for demo on interactive business
Creator of innovative and interactive exhibitions,with exclusive IP
rights for Avengers and Transformers. With the acquisition of
Price Relative Victory Hill Exhibitions (VHE) in September 2015, Cityneon has
S$ Relative Index evolved to become a creator of innovative and interactive
0.8

0.7
416
exhibitions, focusing on creating innovative and captivating
366

0.6 316
content, and delivering engaging and interactive exhibitions to
0.5 266 audiences. To date, it has secured two IP rights – The Avengers
0.4 216 from Marvel in 2013 and Transformers from HASBRO in 2015.
0.3 166

0.2 116 Scalable business model with low execution risk. Cityneon’s
0.1
May-12 May-13 May-14 May-15
66
May-16
earnings are directly correlated with its number of exhibits. So
far, it has two permanent sets in Las Vegas and another two
Cityneon Holdings (LHS) Relative STI INDEX (RHS)
travelling sets; we expect it will have a total of six sets by end-
Forecasts and Valuation 2017 and eight sets by 2018. The group operates on a relatively
FY Dec (S$m) 2015A 2016F 2017F 2018F low execution risk model as outside the US, it will find partners
Revenue 96.5 98.6 119 143 in the target region, which will assume the operating risks.
EBITDA 2.63 14.0 29.9 40.3
Pre-tax Profit 0.79 8.41 21.0 29.3
Potential for third IP, and to tap on other Walt Disney franchises.
Net Profit 0.87 6.66 16.3 22.7 There is a huge pool of franchises to be tapped under the Disney
Net Pft (Pre Ex.) 0.87 6.66 16.3 22.7 umbrella, aside from the Marvel franchise. Some attractive
EPS (S cts) 0.39 2.77 6.78 9.42 options include Star Wars, Jurassic Park, Batman and Spider. We
EPS Pre Ex. (S cts) 0.39 2.77 6.78 9.42 expect the VHE team to leverage their credentials in developing
EPS Gth (%) (85) 602 145 39
the Avengers and Transformers exhibits to leapfrog to the next
EPS Gth Pre Ex (%) (85) 602 145 39
Diluted EPS (S cts) 0.39 2.77 6.78 9.42 IP.
Net DPS (S cts) 0.40 0.0 0.0 0.0 Expect earnings to improve from FY16F. Earnings for FY16
BV Per Share (S cts) 22.4 22.2 28.3 36.1 should see a jump with the incorporation of VHE, due to
PE (X) 187.6 26.7 10.9 7.9
contribution from the Avengers set in Paris and Las Vegas, as
PE Pre Ex. (X) 187.6 26.7 10.9 7.9
P/Cash Flow (X) 56.5 nm 8.7 6.2 well as an upfront licence fee to be partially recognised in FY16
EV/EBITDA (X) 57.5 13.6 6.2 4.3 for the 2-year agreement in China. Thereafter, a ramp-up in
Net Div Yield (%) 0.5 0.0 0.0 0.0 operational sets will drive earnings growth. We have not
P/Book Value (X) 3.3 3.3 2.6 2.1 factored in the potential of a third IP.
Net Debt/Equity (X) CASH 0.2 0.1 CASH
ROAE (%) 2.3 12.9 26.8 29.3 Initiate with BUY; TP S$1.03, based on peer average of 15.2x
FY17F earnings. At a low PE to growth of <0.1x, stock is
Consensus EPS (S cts): 2.30 6.60 8.90 attractive to investors seeking growth and unique ideas in the
Other Broker Recs: B: 2 S: 0 H: 0 entertainment industry. An expanding project pipeline, plans to
add a third IP right, and potential tie ups with CMC are catalysts
ICB Industry : Industrials
for the stock.
ICB Sector: Support Services
Principal Business: With the acquisition of Victory Hill Exhibitions
(VHE) in September 2015, Cityneon has evolved to become a At A Glance
creator of innovative and interactive exhibitions, focusing on Issued Capital (m shrs) 244
creating innovative and captivating content, and delivering Mkt. Cap (S$m/US$m) 181 / 131
engaging and interactive. Major Shareholders (%)
Source of all data: Company, DBS Bank, Bloomberg Finance L.P Star Publications 52.6
Tan Aik Ti 16.4
Free Float (%) 31.0
3m Avg. Daily Val (US$m) 1.6

ASIAN INSIGHTS VICKERS SECURITIES

ed: TH / JC
 Company Focus
Cityneon Holdings
INVESTMENT THESIS
Profile
With the acquisition of Victory Hill Exhibitions (VHE) in
September 2015, Cityneon has evolved to become a creator
of innovative and interactive exhibitions, focusing on
creating innovative and captivating content, and delivering
engaging and interactive exhibitions to audiences. To date,
it has secured two IP rights – The Avengers from Marvel in
2013 and Transformers from HASBRO in 2015.
Valuation
Initiate with BUY; TP S$1.03, based on peer average of 15.2x
FY17F earnings. At a low PE to growth of <0.1x, stock is
attractive to investors seeking growth and unique ideas in the
entertainment industry. An expanding project pipeline, plans
to add a third IP right, and potential tie ups with CMC are
catalysts for the stock.
Source: DBS Bank
ASIAN INSIGHTS
Page 2
Rationale
Scalable business model with low execution risk. Cityneon’s
earnings are directly correlated with the number of exhibits
it has. So far, it has two permanent sets in Las Vegas and
another two travelling sets; we expect it will have a total of
six sets by end-2017 and eight sets by 2018. The group
operates on a relatively low execution risk model as outside
the US, it will find partners in the target region, which will
assume the operating risks.
Potential for third IP, and to tap on other Walt Disney
franchises. There is a huge pool of franchises to be tapped
under the Disney umbrella, aside from the Marvel franchise.
Some attractive options include Star Wars, Jurassic Park,
Batman and Spider. We expect the VHE team to leverage
their credentials in developing the Avengers and Transformers
exhibits to leapfrog to the next IP.
.
Risks
Limited track record for VHE
VHE was formed in 2012 and the first exhibition was in New
York in 2014.
Earnings dependent on number of visitors
Though Cityneon will usually get upfront payment fees from
operators to use its exhibits, a higher visitorship would
enable the group to generate higher royalties in excess of
the minimum guarantees on royalties. Furthermore,
ancillaries sales like merchandise, photo, food & beverage
are also dependent on the number of visitors.
Low free float, key stakeholders control more than half of
the company.
Shares in Cityneon remain tightly held, with a free float of
about 30%. Star Media still holds about 52.6% after the
placement while CEO Ron Tan holds another 16.4%.
VICKERS SECURITIES

SWOT Analysis
Strengths
• Secured two IP rights
VHE has secured two IP rights since incorporation in 2012.
VHE sealed a multi-year deal with Marvel Entertainment for
the rights to use Avengers S.T.A.T.I.O.N. till 2024. In
November 2015, VHE signed a deal with HASBRO Studios for
Transformers franchise till year 2023.
• Strong pipeline of Avengers/Transformers movies should
bode well for attracting visitorship
Marvel has a strong movie pipeline stretching to 2020. For
Transformers, four more films are coming in the next ten
years, with Transformers 5 slated to launch in June 2017.
• Helmed by industry veteran
Mr Ron Tan, CEO, was the producer of the popular Hi-5
series. Earlier in his career, he served in various management
positions, including Media Corp. He is supported by
established creative officers and producers in US.
• Projects pipeline till 2017
VHE targets to launch Transformers in Las Vegas and China
by end-2016. For next year, VHE intends to venture into
Middle East, rest of Asia and others parts of China.
Opportunities
• Potential for third IP
There is a huge pool of franchises to be tapped under the
Disney umbrella, aside from the Marvel franchise. Some
attractive options include Star Wars, Jurassic Park, Batman
and Spider. We expect the VHE team to leverage their
credentials in developing the Avengers and Transformers
exhibits to leapfrog to the next IP.
• Placement to strategic investors, paving way for growth
The recent placement to a strategic investor like CMC, a
media and entertainment investment with operating
platform in China, enhances collaboration opportunities
between the two entities.
• IP rights have no limits on location
VHE can venture into any part of the world with the two
existing IP rights. Though it makes more business sense to
target the larger cities first, VHE has vast opportunities as
there are >30 cities globally with population of >10m.
Source: DBS Bank
ASIAN INSIGHTS
Company Focus
Cityneon Holdings
Weakness
• Limited track record for VHE
VHE was formed in 2012 and its first exhibition was in New
York in 2014, followed by Korea in 2015 and Paris this year.
• Earnings dependent on number of visitors
Though Cityneon will usually get upfront payment fees from
operators to use its exhibits, a higher visitorship would
enable the group to generate higher royalties in excess of
the minimum guarantees on royalties. Furthermore,
ancillaries sales like merchandise, photo, food & beverage
are also dependent on the number of visitors.
• Low free float, key stakeholders control more than half of
the company
Shares in Cityneon remain tightly held, with a free float of
about 30%. Star Media still holds about 52.6% after the
placement while CEO Ron Tan holds another 16.4%.
Threats
• Ability to find suitable partners in host country
VHE will tie up with a partner in the host country for its
travelling sets. Failure to get a reliable and credible partner
could affect VHE’s image.
• Outbreak of contagious disease
An outbreak of disease, especially contagious ones, could
affect the visitorship of VHE’s exhibition.
• Sustainability of interest in interactive exhibition
With the advancement of today’s technology, the
emergence of fresh ideas in the interactive exhibition space
and other entertainment areas should not be ruled out.
VICKERS SECURITIES
Page 3
 Company Focus
Cityneon Holdings

Company Background
Background: VHE and the interactive exhibitions
Acquired by Cityneon in September 2015 to boost earnings. Past Exhibitions
Founded in 2012, Victory Hill Exhibitions (VHE) is an Location Period
exhibition Production and Distribution Company focused on Avengers
delivering engaging, educational and interactive exhibitions New York Jul 2014 to Sep 2015
Korea May 2015 to Sep 2015
for the global market. Cityneon Holdings, whose traditional Paris Apr 2016 to Sep 2016
business lies in Interior Architecture, Exhibitions, Events and
Experiential Environments – in other words, the less Las Vegas * Opens in May 2016
‘interactive’ aspects of design and exhibition services – has Transformers
China Dec 2016 to Dec 2018
experienced deteriorating margins over the years as
Las Vegas * Oct 2016
competition in the traditional exhibitions business has
*permanent sets
intensified. The acquisition of VHE in September 2015 was
thus a strategic one. Source: Company, DBS Bank

Two IP rights secured :

1) The Avengers
VHE’s interactive exhibits: pictures speak a thousand
In 2013, VHE sealed a multi-year deal with Marvel
words
Entertainment to acquire the rights to use Avengers
S.T.A.T.I.O.N. (Scientific Training and Tactical Intelligence Visitors and an interactive game in Korea
Operative Network). In 2015, the contract was extended
from 2017 to 2024. Marvel’s The Avengers includes Iron
Man, The Hulk, Captain America and Thor. So far, VHE has
held an Avengers S.T.A.T.I.O.N. exhibition in New York in July
2014, Korea in May 2015, Paris in April 2016 and the Las
Vegas permanent installation will be opening in May 2016.
2) Transformers
In November 2015, VHE signed a deal with HASBRO Studios
for the Transformers franchise till year 2023. The
Transformers Experience is a revolutionary new walk-through
exhibit that immerses audiences in the world of robotics.
Through the use of leading 3D stereoscopic technologies,
advanced robotics, dynamic multimedia and projection
mapping, intricate sets and engaging performances, Source: Company
audiences will be taken on a journey that will enable them to
witness life-sized robots being brought to life. The first Iron Man exhibit in Korea
exhibition will be in October 2016 at Las Vegas and another
one in China in December 2016.

Timeline of VHE’s key milestones

2012 Founded VHE in 2012

Signed deal with Marvel in Construction of US$8.5m

2013
2013 Avengers set in Dec 2013

Premier of Avengers STATION 2014

in New York in May 14
Premier of Avengers STATION
in Korea in Jun 2015

VHE acquired by Cityneon in

2015 Sep 2015
Signed deal in Aug 2015 to
launch Avenger and
Transformers in Las Vegas Signed deal with Hasbro in Oct Source: Company
2015

Opened Avengers STATION in

Paris in Apr 2016
Signed term sheet in Apr 2016
2016
for Transformers’ deal in China
Placement of 40m new and
vendor shares

Source: Victory Hill Exhibitions

ASIAN INSIGHTS VICKERS SECURITIES

Page 4
 Company Focus
Cityneon Holdings

Avengers S.T.A.T.I.O.N. New York iii) Exhibitions – design, fabrication, installation and
project management of customised exhibition booths
and pavilions, and rental of exhibition-related modules
iv) Experiential environment – facades, scenic fabrication,
replicas, show sets and props, landscaping to theme
parks and attractions, expositions, museums and
galleries, etc.

Old business facing structural decline. A slowdown in the

global economy and China in particular, as well as the low oil
price environment, has lowered demand for exhibitions and
events (e.g. lower quantities of projects tendered in China, Oil
& Gas exhibitions scaling down). Low barriers to entry have also
caused an eroding of margins and return on equity over time
(see charts inset), as competition intensifies. We believe the
Source: Company
trend is likely to continue. After a bumper year in FY15 where
revenue was boosted by the delivery of large projects - SEA
Avengers S.T.A.T.I.O.N. Paris
Games 2015, the Singapore 50th National Day Celebration, the
8th ASEAN Para-Olympic Games, and the Oman Pavilion at the
World Expo held in Milan – revenues should taper off in FY16.
There is some cyclicality in these businesses: even years are
traditionally the better years as more bi-annual regional expos
are held in those years. We foresee revenues falling to the
S$70-75m level over the next few years, while net profits
should remain stable at around the S$1m level – tiny compared
to VHE’s forecasted profit contribution.

CityNeon's old businesses – relatively stable revenues

but…
120
Source: Company
100 Interior architecture

The Las Vegas permanent attraction 80

Event management
60

40 Exhibition Services

20
Experimental
environment (ex-
0 Thematics)
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016F
2017F
2018F

Source: Company, DBS Bank estimates

…experiencing declining margins and ROE

40%

30%
Source: Company
20%
Cityneon’s old businesses – not the best 10%
returns
0%

Four segments make the whole. CityNeon’s traditional -10%

business comprises four business segments:
-20%

i) Interior architecture – design and interior fitting-out -30%

services for commercial properties, healthcare, ROE (%) Net Margin (%)
showrooms, etc.
Source: Company, DBS Bank estimates
ii) Event management – creating, developing, hosting
and managing events

ASIAN INSIGHTS VICKERS SECURITIES

Page 5
 Company Focus
Cityneon Holdings
Business model: one permanent site with a
few travelling exhibits
Las Vegas flagship permanent attraction will be operated by
VHE. VHE has a permanent exhibition site in Las Vegas
occupying approximately 30,000 sqft and located at Treasure
Island Hotel on the Las Vegas strip, which will house both an
Avengers S.T.A.T.I.O.N and Transformers attraction. Ticket
sales should account for the largest proportion of top-line
revenues from Las Vegas, with merchandise sales, sales of
photos, sponsorship revenue and naming rights also
contributing. Ticket price is about US$30 each, which is
affordable. Naming rights refer to the fees that will be paid to
VHE by a prospective partner for naming the building that
houses the Avengers/Transformers exhibits on the Las Vegas
Strip, and advertisement time on the large LCD screens
fronting it. There could be upside risk to our earnings
forecast; at the moment we are imputing US$4m/year
beginning in FY2017 in our model but we note that there
have been more generous fees paid for naming rights in the
vicinity, as the strip area is prime location in Las Vegas.
Travelling sets are scalable and have minimal execution risk.
While VHE requires about US$8-9m in capex outlay for the
first Avengers and Transformers sets it builds, subsequent sets
should cost only about US$3m as a result of moving along
Victory Hill Exhibitions – two distinct models
Las Vegas (permanent sets)
Sources of revenue:
Ticket sales (incl. processing charges)
Minimum
Merchandise sales / Photo ops
guarantees
reduce risk
Sponsorship revenue of non-
performance
Naming rights
Sources of expenditure:
Depreciation of the set
COGS (merchandise)
Rental expense
SG&A/ other opex
Royalties to Marvel/Hasbro (10% of
net ticket sales)
Risk-reward profile:
CityNeon takes on execution risk.
Lower margin (DBS estimate of 25%
net margin) but higher nominal take
Source: Company, DBS Bank estimates
ASIAN INSIGHTS
Page 6
the learning curve. This enables the company to scale the
number of sets (management targets a total of four travelling
sets by end-2017, and we believe they could hit six travelling
sets by end-2018), deploying them to different regions
globally. A large portion of the revenue from this model will
come from upfront licence fees – akin to prepaid rental for
the sets – from VHE’s partners who will also operate those
sets; licence fees will be paid before the opening of the
attractions. Additionally, VHE takes a cut of ticket sales and
merchandise (see diagram below), which also come with
minimum guarantees, thus reducing downside risk.
Finding reputable partners is crucial for the travelling sets.
Partners wielding scale and influence in their respective
regions/cities enable effective marketing of the attractions.
For example, TF1 (a EUR2.3bn market cap French media
conglomerate), was able to promote VHE’s Avengers
attraction in Paris to the point of being the #1 most tweeted
about topic in Paris for its opening week. With Beijing
Starclouds Entertainment Development Co signed on as
partner for the China travelling attraction (whose key
management includes Li Yao Han, previous founder and
chairman of Wanda Cinema Line), and a recent placement of
shares to strategic investor CMC Holdings (helmed by former
Shanghai Media Group executive Li Ruigang), VHE seems to
be doing well in this respect.
Travelling sets (operated by partners)
Sources of revenue:
20% cut of ticket sales
Upfront license fee from partner for
Half of the 20% goes to Marvel or Hasbro
usage of set
Merchandise (sales to partner + cut
of final sales to customer)
Sources of expenditure:
Depreciation of the set
COGS (merchandise)
SG&A/ other opex (minimal)
Royalties to Marvel/Hasbro (10% of
ticket sales)
Risk-reward profile:
No execution risk; partner runs the
operations
High margins (DBS estimate 25-35%
net margin) but lower nominal take
VICKERS SECURITIES
 Company Focus
Cityneon Holdings

Competitive Strengths & Growth Strategies
• Strong pipeline of Avengers/Transformers movies
should bode well for attracting visitorship. Marvel has a
strong movie pipeline stretching to 2020. The pipeline
includes Guardians of the Galaxy 2, Thor and
Spiderman in 2017; Avengers Infinity War part 1, Black
Panther and Ant-man in 2018; Avengers Infinity War
part 2, Captain Marvel and Inhumans in 2019, and yet-
unnamed movies in 2019/2020. For Transformers, four
more films are coming in the next ten years, with
Transformers 5 slated to launch in June 2017.

Marvel movie release timeline

Source: Disney

Historical box office takings – Avengers and Transformers

Release #Rank by gross Gross takings Grossing of the average
Name of movie Date takings for that year (US$m) movie that year
Transformers Jul-07 3 319 15.4
Iron Man May-08 2 318 16.0
The Incredible Hulk Jun-08 17 135 16.0
Transformers: Revenge of the Fallen Jun-09 2 402 20.8
Iron Man 2 May-10 3 312 19.1
Thor May-11 10 181 16.8
Captain America: The First Avenger Jul-11 12 177 16.8
Transformers: Dark of the Moon Jun-11 2 352 16.8
The Avengers May-12 1 623 16.4
Iron Man 3 May-13 2 409 15.9
Thor: The Dark World Nov-13 12 206 15.9
Transformers: Age of Extinction Jun-14 7 245 14.9
Captain America: The Winter Soldier Apr-14 4 260 14.9
Avengers: Age of Ultron May-15 3 459 15.9
Ant-Man Jul-15 14 180 15.9
Total: 4,580
Source: Box Office Mojo

Avengers and Transformers have a strong box-office history.
As shown in the table above, the movies in the Avengers
and Transformers series often achieve Top 10 box-office
positions, and are always within the top 20 at minimum,
with the Iron Man, the Avengers and Transformers movies
doing particularly well in terms of both gross takings and
consistency in rankings over time. This, together with the
strong pipeline of upcoming movies, should have a spillover
effect in terms of visitorship to VHE’s attractions.
Projects pipeline till 2017
VHE targets to launch Transformers in Las Vegas and China
by end-2016. For next year, VHE intends to venture into
Middle East, rest of Asia and others parts of China.
There are no limits on locations for its IP rights. VHE can
venture into any part of the world with the existing two
franchises. Though it makes more business sense to target
the larger cities first, VHE has vast opportunities as there are
>30 cities globally with population of >10m.

ASIAN INSIGHTS VICKERS SECURITIES

Page 7
 Company Focus
Cityneon Holdings
Projects in the pipeline for 2016/17
Singapore Avengers
Sweden Avengers
Taiwan Avengers
Middle East Transformers
Europe Transformers
Source: DBS Bank, Company
Helmed by industry veteran
Helmed by industry veteran, Mr Ron Tan, the single largest
shareholder, who was the producer of the popular Hi-5
series. Earlier in his career, he served in various management
positions, including Media Corp. He is supported by Nicholas
Cooper, Chief Creative Officer, also a founder of VHE;
Richard Sears, Senior Creative Producer and Olivier Katz,
Producer.
Key Management Team
Ron Tan, Chief Executive Officer / President, Victory Hill
Exhibitions
Executive Director & single largest individual shareholder of
Cityneon Holdings. He was the producer of award-winning Hi-5
television series (Hi-5 House) & Hi-5 movie “Some Kind of
Wonderful”. The TV series was sold and broadcasted to more
than 200 countries globally. Earlier in his career, he served in
various distinguished management positions at Media Corp,
LexisNexis Asia Pacific in Singapore & Hong Kong, Singapore
Tourism Board and Economic Development Board of Singapore.
Nicholas Cooper, Chief Creative Officer, Founder of VHE
An award-winning producer/director/writer with over 15 years of
experience in the entertainment industry. He specialises in
creating engaging entertainment productions across multiple
platforms and has been responsible for numerous productions at
Warner Bros.
Richard Sears, Senior Creative Producer
He has written and directed short films for Canal Plus/France,
Nissan, University of Phoenix and Department of Homeland
Security. His films have been played at numerous festivals around
the world.
Olivier Katz, Producer
He has over 25 years of senior-level managerial experience with
television, entertainment, advertising & media companies. He is
the founding principal of Blue Pixel Media, Kindling Digital &
Homendo and was Animation Producer of SouthPark TV series.
He has garnered numerous national and international awards.
Source: Company, DBS Bank
ASIAN INSIGHTS
Page 8
Scalable business model with manageable execution
risk. The first set costs around US$8-9m to build but the
subsequent sets cost only about one-third of the original
cost per set. Thus, Cityneon is able to achieve operational
leverage with every subsequent set built. Based on
Cityneon’s current capacity, we expect the Group to have a
total of six sets by end-2017 and eight sets by 2018.
Furthermore, execution risk is minimal for the travelling
exhibits as the bulk of the risk is borne by the operator. For
instance, in April 2016, VHE entered into a non-binding
term sheet with Beijing Starclouds Entertainment
Development to host and operate the Transformers
Experience touring exhibitions in China for two years on an
exclusive licence. Starclouds will bear the execution risk
while Cityneon mainly builds and provides the sets for
exhibition.
Potential for third IP – a look at some candidates
A universe of possibilities. While we have not factored in the
securing of a third IP (i.e. in addition to Avengers and
Transformers), we believe there are various attractive options
out there that VHE could bid for, if the studios are willing to
farm out such attractions. Management has two criteria for
new IPs: 1) They should have box office takings of over
US$1bn globally; and 2) There must be sequels in the
pipeline.
We list below the top 30 grossing movie franchises that
have had sequels since 2010, and whose franchise has
grossed above US$1bn globally. Some attractive names like
Harry Potter, James Bond and Avatar already have interactive
or semi-interactive exhibitions being undertaken by
competitors. However, there remain various options right up
VHE’s alley – superheroes and sci-fi themed franchises –
that, to our knowledge, are as yet underdeveloped.
In the table below, we highlight in yellow those franchises
that we believe are prime candidates. Star Wars comes out
tops as its current exhibitions are rather static in nature,
while the recent Star Wars: The Force Awakens (2015) was
the highest grossing film that year by a stratospheric margin,
and a healthy pipeline of movies is in the making. Moving
on, Batman and Superman will be united in the upcoming
Justice League movies in 2017 and 2019, and so a Justice
League IP makes sense too. Otherwise, Spider-man, X-men,
Jurassic Park and Star Trek are also prime candidates in our
opinion (see chart below).
VHE will leverage their track record. We expect the VHE
team to leverage their credentials in developing the
Avengers and Transformers exhibits to leapfrog to the next
IP. Securing a third IP thus remains the key upside risk to our
forecasts.
VICKERS SECURITIES
 Company Focus
Cityneon Holdings

List of candidates for potential third IP – superheroes again?

Infl. Adj.
Domestic Dom. Box Worldwide
No. of Box Office Office Box Office First No. of
Franchise Movies (US$bn) (US$bn) (US$bn) Year Last Year Years Comment
Marvel Cinematic Universe 21 $3.94 $4.15 $10.13 2008 2019 11 VHE
Harry Potter 10 $2.39 $2.99 $7.73 2001 2018 17 Competitor GES is running this one
James Bond 25 $2.11 $5.31 $7.07 1963 2015 52 There is already a SPY museum and travelling exhibit for the Bond franchise
Star Wars 12 $3.20 $5.66 $6.55 1977 2019 42 Static exhibitions in various locations (mainly museums) globally
Peter Jackson's Lord of the Rings 6 $1.85 $2.33 $5.90 2001 2014 13 No more sequels/prequels planned
Batman 16 $2.23 $3.12 $4.57 1989 2016 27 Justice league movies in 2017/2019
Spider-Man 7 $1.58 $1.99 $3.96 2002 2017 15 2 more movies lined up through 2020
Wolverine, Deadpool sequel planned, Gambit, The New Mutants movies in the
X-Men 10 $1.66 $1.95 $3.92 2000 2016 16 w orks, X-Men 7 rumoured
Fast and the Furious 8 $1.29 $1.47 $3.90 2001 2017 16 Hard to exhibit anything but cars..?
Transformers 5 $1.33 $1.48 $3.78 1986 2014 28 VHE
Pirates of the Caribbean 4 $1.28 $1.61 $3.71 2003 2011 8 5th film set to be released in 2017
Jurassic World sequel planned for 2018; 'Jurasic World: The Exhibition'
Jurassic Park 5 $1.46 $2.10 $3.69 1993 2018 25 ongoing at Melbourne museum
Shrek 7 $1.42 $1.80 $3.55 2001 2018 17 Fifth movie in the pipeline but unconfirmed
Twilight 6 $1.37 $1.49 $3.32 2008 2012 4 4 books, 4 movies - limited future potential
Hunger Games 4 $1.45 $1.50 $2.96 2012 2015 3 3 books, 3 movies - limited future potential
The Hobbit 3 $0.82 $0.85 $2.93 2012 2014 2 No more Hobbit movies planned
Mission: Impossible 6 $0.93 $1.27 $2.80 1996 2018 22 Mission: Impossible 6 in the pipeline
Avatar 4 $0.76 $0.83 $2.78 2009 2022 13 Sequel planned for 2018 - but competitor GES already developing the exhibition
Ice Age 5 $0.73 $0.90 $2.78 2002 2016 14 Would be hard to attract older audiences
Despicable Me 6 $0.96 $0.99 $2.68 2010 2017 7 Would be hard to attract older audiences
Iron Man 3 $1.04 $1.13 $2.42 2008 2013 5 Part of the Marvel universe
Superman 8 $1.13 $1.84 $2.39 1978 2016 38 Justice league movies in 2017/2019
Madagascar 5 $0.67 $0.78 $2.27 2005 2018 13 Would be hard to attract older audiences
Captain America 3 $0.79 $0.81 $2.14 2011 2016 5 Part of the Marvel universe
Toy Story 5 $0.88 $1.25 $1.98 1995 2018 23 Would be hard to attract older audiences
Star Trek 13 $1.23 $2.22 $1.92 1979 2016 37 Star Trek Beyond movie to air in 2016, 4th movie planned but no date set
Terminator 7 $0.60 $0.94 $1.83 1984 2018 34 No future movies in the pipeline
Kung Fu Panda 4 $0.52 $0.57 $1.81 2008 2016 8 Would be hard to attract older audiences
Men in Black 3 $0.62 $0.93 $1.68 1997 2012 15 Crossover movie planned but w ithout original cast; no fixed date
Planet of the Apes 9 $0.65 $1.13 $1.63 1968 2017 49 Next movie to be released in 2017

Source: The-numbers.com, DBS Bank

Placement to strategic investors, paving way for Key Risks

growth
Cityneon has recently conducted a placement of 40m
shares, comprising 20m new shares and 20m vendor shares
at S$0.55 per share to CMC Holdings and other institutional
investors. The strategic investment by CMC enhances
collaboration opportunities between the two entities. CMC
is a prominent media and entertainment investment and
operating platform in China with high-profile portfolios
across the world. CMC’s investments include IMAX China
which is listed in Hong Kong and a majority stake in Star
China. CMC is the majority joint venture partner of
DreamWorks Animation in Oriental DreamWorks which
launched Kung Fu Panda 3 in China early this year; of
Warner Brothers and TVB in Flagship Entertainment Group
which launched 12 movie projects this year.
This placement not only helps to institutionalise Cityneon’s
investor base and but also to increase liquidity.
Earnings dependent on number of visitors
Though Cityneon will usually get upfront payment fees from
operators to use its exhibits, a higher visitorship would
enable the group to generate higher royalties in excess of
the minimum guarantees on royalties. Furthermore, ancillary
sales like merchandise, photo, food & beverage are also
dependent on the number of visitors.
Low free float, key stakeholders control more than half of
the company
Shares in Cityneon remain tightly held, with a free float of
about 30%. Star Media still holds about 52.6% after the
placement while CEO Ron Tan holds another 16.4%.
Ability to find suitable partners in host country
VHE will tie up with a partner in the host country for its
travelling sets. Failure to get a reliable and credible partner
could affect VHE’s image.

Following the placement, Star Media has reduced its stake in
Cityneon to about 52.6% while IGV33, a private vehicle
owned by Ron Tan, has about 16.4% balance.
So far, VHE has worked with Group TF1, a public-listed
company in France with a market capitalisation of about
€2bn, and is the owner of the largest private European
television channel, TF1. In China, VHE has partnered Beijing
Starclouds Entertainment Development on a 2-year exclusive
licence to host and operate the Transformers Experience
touring exhibitions. The chairman of Starclouds was a senior
management from the Wanda Group, China's largest
commercial property company and the world's largest
cinema chain operator.

ASIAN INSIGHTS VICKERS SECURITIES

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 Company Focus
Cityneon Holdings
Outbreak of contagious disease
An outbreak of disease, especially contagious ones, could
affect the visitorship of VHE’s exhibition. The exhibition in
Korea last year was affected by the outbreak of MERS.
Though VHE was not badly affected as the execution risks
were borne by its operator, the visitorship was affected.
Sustainability of interest in interactive exhibition
With the advancement of today’s technology, the
emergence of fresh ideas in the interactive exhibition space
and other entertainment areas should not be ruled out.
Valuation
Currently trading at discount to direct peers on FY17F
valuations. The stock currently trades at 26.7x FY16F PE and
10.9x on FY17F earnings. Its listed peers, which include
experiential exhibition/entertainment-focused companies
and also exhibitions/interior architecture companies, trade at
average of 14x and 12x PE for FY16F and FY17F respectively.
Initiate with BUY, TP: S$1.03. The experiential/interaction
exhibition companies similar to Cityneon generally trade at a
higher PE multiples of 17.2x for FY16F and 15.2x for FY17F
vs the traditional exhibitors of 13x and 11x for the same
period. We believe a 15.2x FY17F PE is fair, as Cityneon
offers strong FY15 to FY18F earnings CAGR of about 300%.
Based on FY17F PE of 15.2x, our target price works out to
S$1.03 per share, which translates to an upside of 39%
from current price. At a low PE to growth of <0.1x, stock is
attractive to investors seeking growth and unique ideas in
the entertainment industry. An expanding project pipeline,
plans to add a third IP right, and potential tie ups with CMC
are catalysts for the stock.
Expect earnings to improve from FY16F. Earnings for FY16
should see a jump with the incorporation of VHE. This will
be due to contribution from the Avengers set in Paris and
Las Vegas, as well as partial upfront licence fee to be
recognised in FY16 for the 2-year agreement in China with
Starclouds that we estimate to amount to ~S$3m.
Thereafter, a ramp-up in operational sets will drive earnings
growth.
ASIAN INSIGHTS
Page 10
DBS forecasts and assumptions
Sharp ramp-up in earnings projected. Although most of
exhibitions lined up will only open their doors from mid-
2016 to end-2016, we expect the upfront recognition of
revenues via licence fees prior to launch of the travelling
exhibitions to help boost FY16 net profits from VHE to about
S$5.6m. Contribution from China will be especially strong,
as VHE will recognise two years’ worth of licence fees for the
Avengers travelling set to be operated by StarClouds from
December 2016 – December 2018. We have derived net
profits of between S$1-4m per travelling set per year,
depending on location and pricing power.
Vegas will begin contributing significantly from FY17
onwards as both the Avengers and Transformers attractions
will be open, providing a bigger pull factor for potential
visitors. We have also assumed US$4m in naming rights per
year in our model, but believe a higher number is possible,
as higher amounts have been paid for similar rights in the
vicinity of Treasure Island.
Meanwhile, the old Cityneon business is forecasted to rake
in a steady ~S$1m per year. For these businesses, execution
and cost control will be paramount; a slip-up in project
execution would trim away whatever margins remain.
Expansion should increase debt levels, but not onerously.
We assume that VHE will be able to scale up to six sets by
end-2017, and further assume another two sets are
deployed in 2018, for a total of eight sets by that year. As a
result of this expansion, we believe the company will take on
incremental debt of ~S$10m in the near term, increasing net
gearing to 0.1x in FY16, but positive cash flows should bring
the company back into a net cash position in FY17, barring
other unexpected capex outlays. Thus, at this point, gearing
remains insignificant.
Not imputing a third IP yet, but securing one would boost
earnings. While the company has its hands full at the
moment with the launch of its various Avengers and
Transformers attractions, we believe the launch of a third IP
is a possibility in the medium term, perhaps by 2019. Given
the high capex (US$8-9m) for the first-time construction of a
new IP set though, elevated depreciation costs mean that
profits should be muted on the first new IP set, but it is
reasonable to assume a boost of S$1-4m per set per year to
the bottom line from the second set onwards.
VICKERS SECURITIES

Assumptions for number of sets (permanent + travelling)
Location and attraction type
Vegas Avengers (A1)
Vegas Transformers (T1)
Europe - Avengers (A2)
China - Transformers (T2)
China - Avengers (A3)
Middle East - Transformers or Avengers
Rest of Asia - Transformers or Avengers
Europe - Transformers (T4)
Source: DBS Bank estimates
Closest peers
Experiential exhibition/entertainment focused companies - Listed Cos
Viad Corp
Premier Exhibitions
Paragon Entertainment
Limited
Merlin Entertainments
Exhibitions/Interior Architecture - Listed Cos
Kingsmen Creatives Ltd
GL events SA
MCH Group Ltd
ITE Group Plc
Pico Far East Holdings
Limited
Sigong Tech Co., Ltd.
Tarsus Group Plc
ASIAN INSIGHTS
Company Focus
Cityneon Holdings
1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18
Announced Avengers exhibit to open this month (May 2016)
Announced Transformers exhibit targeted to launch 4Q16
Announced Exhibition in Paris with TF 1 in April 2016
Announced China first exhibition targeted for Dec 2016
Assumed
Assumed
Assumed
Assumed Our assumptions: 6 sets total by end-2017; 8 by end-2018
Viad (pronounced VEE-ahd) is an S&P SmallCap 600 international experiential services company with operations
in the US, Canada, the UK, continental Europe and the United Arab Emirates. Viad generates revenue through
two main business groups: the Marketing & Events Group and the Travel & Recreation Group.
Premier Exhibitions, through its subsidiaries, is engaged in organising museum-quality exhibitions. The company
also sells tickets, and offers third-party licensing and sponsorship services. It primarily operates in the US, where it
is headquartered in Atlanta, Georgia and employs around 46 people.
Paragon Entertainment is engaged in designing, building and consulting on exhibits and attractions for theme
parks, museums, attractions and leisure destinations, experiential brand and retail centres, aquariums and water
parks. The group also creates, develops and operates its own distinctively branded attractions using proprietary or
third-party branding. In addition, Paragon Entertainment also license third-party attraction-related intellectual
property to the operators of attractions and leisure destinations.
Merlin Entertainments (Merlin) is a family entertainment company. The company operates midway attractions
under various brands including SEA LIFE, Madame Tussauds, The EDF Energy London Eye, Dungeons, Gardaland,
LEGOLAND Discovery Centers, Alton Towers Resort, Warwick Castle, THORPE PARK, Chessington World of
Adventures Resort, Blackpool Tower, Heide Park Resort, WILD LIFE Sydney Zoo and Falls Creek. As of October
2015, the company operated approximately 100 attractions, 12 hotels and four holiday villages in 23 countries
and across four continents. Merlin Entertainments operates in Australia, Europe, Asia and North America. It is
headquartered in Dorset, the UK and employs around 26,000 people.
Kingsmen Creatives (Kingsmen) is an investment holding company that is engaged in the operation of exhibitions
and events, museums, and visitor centres for trade shows and promotional events. The company operates in
Singapore, Malaysia, Hong Kong, Indonesia and China. It is headquartered in Singapore City, and employs
around 1,600 people.
GL events is a provider of integrated solutions and services for events. The group covers three markets:
congresses and conventions; cultural, sports and political events; and trade fairs and exhibitions for professionals
and the general public. The group operates in Europe, the Americas and Asia. It is headquartered in Lyon, France
and employs around 4,107 people.
MCH Group Ltd. (MCH), a holding company of the MCH Group, operates through a group of companies
engaged in the live marketing. The group organises exhibitions and events and provides infrastructure services.
The group operates in Switzerland, where it is headquartered in Basel and employs around 22 people.
ITE Group (ITE) is engaged in organising international trade exhibitions and conferences in developing markets.
ITE organises trade exhibitions and conferences. The group operates in Europe and Asia. It is headquartered in
London, the UK, and employs around 1,027 people.
Pico Far East Holdings (Pico) is engaged in the provision of exhibition and event marketing services. The company
is also engaged in the businesses of museum, themed environment, interior and retail; brand signage and visual
communication; conference and show management; and related businesses. Pico operates in the Americas,
Europe, Africa, the Middle East, and Asia Pacific. It is headquartered in New Territories, Hong Kong and employs
around 2,000 people.
Sigong Tech operates as an exhibition and cultural company. It designs and creates various exhibits and contents;
memorial halls; museums and art gallery; science museum; and exhibition and theme parks. The company
operates in South Korea, where it is headquartered in Seongnam Si and employs around 180 people.
Tarsus Group (Tarsus) is a business-to-business media group with interests in exhibitions, conferences, publishing
and online media. The group operates in the Ireland, the UK, Turkey, Indonesia, the US, the UAE, India, and
China. It is headquartered in Dublin, Ireland.
VICKERS SECURITIES
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Cityneon Holdings

Closest peers (cont’d)

Ascential Holdings Ascential Holdings Limited [previously known as Top Right Group Limited] is a business-to-business, multi-
Limited platform media group jointly owned by Apax Partners and Guardian Media Group. The company is engaged in
organising tradeshows, congresses and international festivals; providing intelligence analysis and forecasting tools
for major industry sectors; and subscription content, including real-time online resources, live events and awards.
The company operates primarily in the UK where it is headquartered in London and employed 1,816 people as at
December 31, 2014.
UBM Plc UBM is the world’s largest ‘pure play’ event organiser. The company organises tradeshows and other live ‘in
person’ events which enable businesses to do business, transact, learn and network as part of a professional or
commercial community. UBM also engages in 'Other Marketing Services' where it carries out campaigns on
behalf of clients looking to enhance their branding, customer awareness, reach and engagement or to generate
sales leads.

Source: Bloomberg Finance L.P, as of 17 May 2016

Peer Comparisons – key competitors

P/E EV/EBITDA P/B Core ROE (%) Net D/E
Bloomberg Market cap
Company Ticker (US$m) FY-ending: FY16F FY17F FY16F FY17F Current FY14 FY15 LTM Current
Closest peers:
Merlin Entertainments MERL LN Equity 6,231 12/2015 20.4x 17.7x 11.5x 10.3x 3.7x 16% 15% 15% 0.82x
Viad Corp VVI US Equity 632 12/2015 14.1x 12.6x 6.3x 6.2x 2.0x 15% 8% 7% 0.22x
Paragon Entertainment Limited PEL LN Equity 4 12/2014 NM NM 6.3x NM 1.0x -30% N/A -7% 0.02x
Premier Exhibitions PRXI US Equity 4 02/2015 NM NM NM NM 0.9x -4% -81% -145% 0.40x
Average: 17.2x 15.2x 8.1x 8.3x 1.9x -1% -19% -32% 0.4x
Other exhibition/architecture-
focused companies:
UBM Plc UBM LN Equity 3,797 12/2015 16.6x 14.1x 13.1x 12.3x 2.9x 29% 11% 11% 0.54x
Ascential Holdings Limited ASCL LN Equity 1,342 12/2015 15.5x 13.6x 12.9x 12.0x N/A N/A N/A N/A 2.55x
ITE Group Plc ITE LN Equity 531 09/2015 12.2x 11.6x 12.2x 11.2x 5.4x 32% 28% 35% 0.53x
GL events SA GLO FP Equity 414 12/2015 10.5x 10.3x 6.5x 6.5x 1.1x 8% 9% 9% 1.00x
MCH Group Ltd MCHN SW Equity 385 12/2015 N/A N/A N/A N/A 0.9x 9% 8% 8% 0.23x
Tarsus Group Plc TRS LN Equity 388 12/2015 18.9x 11.2x 14.9x 9.6x 7.4x 15% 43% 43% 1.09x
Pico Far East Holdings Limited 752 HK Equity 321 10/2015 8.2x 7.3x 3.4x 3.0x 1.5x 15% 17% 17% CASH
Fiera Milano FM IM Equity 142 12/2015 NM 12.4x 14.3x 3.7x 1.5x -73% 2% N/A CASH
Mega Expo Holdings Ltd 1360 HK Equity 120 06/2015 N/A N/A N/A N/A 6.6x N/A 42% -9% CASH
Sigong Tech Co., Ltd. 020710 KS Equity 103 12/2015 N/A N/A N/A N/A 1.4x 9% 1% 1% CASH
Kingsmen Creatives Ltd KMEN SP Equity 89 12/2015 8.9x 7.8x 3.4x 3.1x 1.1x 19% 18% 17% CASH
Average: 13.0x 11.0x 10.1x 7.7x 3.0x 7% 18% 15% 1.0x

CityNeon Holdings CITN SP Equity 126 12/2015 26.0x 10.6x 11.5x 5.4x 3.2x 10.0% 2.3% 2.3% CASH

Source Bloomberg Finance L.P; DBS Bank

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 Company Focus
Cityneon Holdings

Segmental Breakdown
FY Dec 2013A 2014A 2015A 2016F 2017F 2018F
Revenues (S$m)
Old Business 67.8 78.0 96.5 79.5 70.0 77.0
Victory Hill Exhibitions
n.a. n.a. n.a. 19.1 49.0 66.2
(VHE)
Total 67.8 78.0 96.5 98.6 119 143
Net Profit (S$m)
Old Business 0.89 2.35 0.87 1.10 1.07 0.73
Victory Hill Exhibitions n.a. n.a. n.a. 5.6
15.3 22.0
(VHE)
Total 0.89 2.35 0.87 6.66 16.3 22.7
Net Profit Margins (%)
Old Business 1.3 3.0 0.9 1.4 1.5 1.0
Victory Hill Exhibitions
N/A N/A N/A 29.2 31.1 33.2
(VHE)
Total 1.3 3.0 0.9 6.8 13.7 15.8

Source: Company, DBS Bank

Income Statement (S$m)

Margins Trend
FY Dec 2013A 2014A 2015A 2016F 2017F 2018F
20.0%
Revenue 67.8 78.0 96.5 98.6 119 143
Cost of Goods Sold (45.9) (55.9) (73.2) (63.5) (62.1) (70.4) 15.0%
Gross Profit 21.9 22.1 23.3 35.1 57.0 72.8
Other Opng (Exp)/Inc (20.7) (19.3) (22.2) (26.5) (35.9) (43.0) 10.0%

Operating Profit 1.15 2.78 1.15 8.51 21.0 29.8

5.0%
Other Non Opg (Exp)/Inc 0.0 0.0 0.0 0.0 0.0 0.0
Associates & JV Inc 0.0 0.0 0.02 0.02 0.02 0.02 0.0%
Net Interest (Exp)/Inc (0.3) (0.3) (0.4) (0.1) (0.1) (0.5) 2014A 2015A 2016F 2017F 2018F

Exceptional Gain/(Loss) 0.0 0.0 0.0 0.0 0.0 0.0 Operating Margin % Net Income Margin %

Pre-tax Profit 0.85 2.51 0.79 8.41 21.0 29.3

Tax 0.0 (0.2) 0.04 (1.7) (4.6) (6.6)
Minority Interest 0.07 0.03 0.04 (0.1) (0.1) 0.0
Preference Dividend 0.0 0.0 0.0 0.0 0.0 0.0
Net Profit 0.89 2.35 0.87 6.66 16.3 22.7
Net Profit before Except. 0.89 2.35 0.87 6.66 16.3 22.7
EBITDA 2.42 4.02 2.63 14.0 29.9 40.3
Growth
Revenue Gth (%) (18.3) 15.1 23.7 2.1 20.8 20.3
EBITDA Gth (%) nm 65.8 (34.4) 432.1 113.1 35.0
Opg Profit Gth (%) nm 142.3 (58.8) 643.5 146.9 41.7
Net Profit Gth (Pre-ex) nm 162.2 (62.9) 665.1 145.0 39.0
(%)
Margins & Ratio
Gross Margins (%) 32.2 28.3 24.1 35.6 47.8 50.8
Opg Profit Margin (%) 1.7 3.6 1.2 8.6 17.7 20.8
Net Profit Margin (%) 1.3 3.0 0.9 6.8 13.7 15.8
ROAE (%) 4.2 10.0 2.3 12.9 26.8 29.3
ROA (%) 1.8 4.5 1.2 7.2 15.5 18.1
ROCE (%) 1.7 5.6 1.0 9.4 19.3 22.0
Div Payout Ratio (%) 0.0 0.0 101.6 0.0 0.0 0.0
Net Interest Cover (x) 3.9 10.4 3.1 71.1 296.9 60.9
Source: Company, DBS Bank

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 Company Focus
Cityneon Holdings

Quarterly / Interim Income Statement (S$m)

FY Dec 2H2013 1H2014 2H2014 1H2015 2H2015

Revenue 44 30 48 41 56
Cost of Goods Sold (30) (20) (36) (31) (42)
Gross Profit 15 10 12 10 14
Other Oper. (Exp)/Inc (12) (10) (10) (10) (12)
Operating Profit 3 0 3 (1) 2
Other Non Opg (Exp)/Inc 0 0 0 0 0
Associates & JV Inc 0 0 0 0 0
Net Interest (Exp)/Inc 0 0 0 0 0
Exceptional Gain/(Loss) 0 0 0 0 0
Pre-tax Profit 3 0 2 (1) 2
Tax 0 0 0 0 0
Minority Interest 0 0 0 0 0
Net Profit 3 0 2 (1) 2
Net profit bef Except. 3 0 2 (1) 2
EBITDA 3 1 3 0 2

Growth
Revenue Gth (%) 88.3 (31.5) 57.3 (14.7) 37.1
EBITDA Gth (%) nm (77.4) 285.3 nm nm
Opg Profit Gth (%) nm (91.7) 949.2 nm nm
Net Profit Gth (Pre-ex) nm (95.6) 1,722.1 nm nm
(%)
Margins
Gross Margins (%) 32.8 32.7 25.5 23.5 24.6
Opg Profit Margins (%) 6.6 0.8 5.3 (1.4) 3.1
Net Profit Margins (%) 6.2 0.4 4.7 (1.8) 2.8

Source: Company, DBS Bank

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 Company Focus
Cityneon Holdings

Balance Sheet (S$m) Asset Breakdown

FY Dec 2013A 2014A 2015A 2016F 2017F 2018F Net Fixed
Assets -
36.4%
Net Fixed Assets 2.33 2.26 16.0 25.8 32.1 33.7 Debtors -
Invts in Associates & JVs 0.0 0.0 0.38 0.39 0.41 0.42 49.5%

Other LT Assets 1.39 1.21 10.7 16.3 14.8 13.4

Cash & ST Invts 14.2 23.9 24.3 9.24 14.2 28.4 Assocs'/JVs -
Inventory 0.27 0.32 0.19 0.36 0.35 0.40 0.6%

Debtors 21.5 18.6 26.0 35.1 42.4 51.0

Other Current Assets 9.15 9.88 9.95 9.95 9.95 9.95 Bank, Cash
and Liquid
Total Assets 48.8 56.2 87.6 97.1 114 137 Inventory - Assets -
0.5% 13.0%

ST Debt 12.7 13.4 11.7 11.7 11.7 11.7

Creditor 11.7 14.8 23.8 17.5 17.1 19.4
Other Current Liab 2.09 2.18 0.97 2.64 5.53 7.53
LT Debt 0.0 0.0 0.0 10.0 10.0 10.0
Other LT Liabilities 0.10 0.22 1.10 1.10 1.10 1.10
Shareholder’s Equity 21.8 25.1 49.6 53.6 68.1 86.9 Assume debt of S$10m
Minority Interests 0.52 0.49 0.45 0.51 0.57 0.60 to fund new sets
Total Cap. & Liab. 48.8 56.2 87.6 97.1 114 137

Non-Cash Wkg. Capital 17.2 11.8 11.4 25.2 30.0 34.4

Net Cash/(Debt) 1.53 10.5 12.6 (12.5) (7.5) 6.71
Debtors Turn (avg days) 129.9 93.8 84.4 113.1 118.8 119.0
Creditors Turn (avg days) 103.7 88.2 98.2 129.9 118.8 111.5
Inventory Turn (avg days) 2.1 1.9 1.3 1.7 2.4 2.3
Asset Turnover (x) 1.4 1.5 1.3 1.1 1.1 1.1
Current Ratio (x) 1.7 1.7 1.7 1.7 1.9 2.3
Quick Ratio (x) 1.4 1.4 1.4 1.4 1.6 2.1
Net Debt/Equity (X) CASH CASH CASH 0.2 0.1 CASH
Net Debt/Equity ex MI (X) CASH CASH CASH 0.2 0.1 CASH
Capex to Debt (%) 3.9 7.5 38.8 63.3 63.1 49.4

Source: Company, DBS Bank

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 Company Focus
Cityneon Holdings

Cash Flow Statement (S$m) Capital Expenditure

FY Dec 2013A 2014A 2015A 2016F 2017F 2018F S$m
16.0

Pre-Tax Profit 0.85 2.51 0.79 8.41 21.0 29.3 14.0

12.0
Dep. & Amort. 1.27 1.24 1.47 5.48 8.82 10.5
10.0
Tax Paid 0.0 0.03 (0.2) 0.0 (1.7) (4.6)
8.0
Assoc. & JV Inc/(loss) 0.0 0.0 0.0 0.0 0.0 0.0 6.0
Chg in Wkg.Cap. 0.97 5.85 0.80 (15.5) (7.7) (6.4) 4.0

Other Operating CF 0.66 (0.1) 0.07 0.0 0.0 0.0 2.0

Net Operating CF 3.76 9.55 2.89 (1.6) 20.4 28.9 0.0

2014A 2015A 2016F 2017F 2018F
Capital Exp.(net) (0.5) (1.0) (4.5) (13.7) (13.7) (10.7) Capital Expenditure (-)
Other Invts.(net) 0.0 0.0 (1.1) 0.0 0.0 0.0
Invts in Assoc. & JV 0.0 0.0 (0.4) 0.0 0.0 0.0
Div from Assoc & JV 0.0 0.0 0.0 0.0 0.0 0.0
Other Investing CF 0.0 0.08 (10.0) (7.0) 0.0 0.0
Net Investing CF (0.5) (0.9) (16.0) (20.7) (13.7) (10.7)
Div Paid 0.0 0.0 (0.9) 0.0 0.0 0.0 Assume up to 6 sets by end-
Chg in Gross Debt 0.22 0.73 (3.1) 10.0 0.0 0.0 2017 – in line with
Capital Issues 0.0 0.0 15.7 0.0 0.0 0.0 management’s guidance
Other Financing CF (0.3) 0.0 0.87 (2.7) (1.8) (3.9)
Net Financing CF (0.1) 0.69 12.6 7.34 (1.8) (3.9)
Currency Adjustments 0.08 0.39 0.85 0.0 0.0 0.0
Chg in Cash 3.24 9.70 0.39 (15.0) 4.94 14.2
Opg CFPS (S cts) 3.15 4.18 0.95 5.76 11.7 14.6
Free CFPS (S cts) 3.69 9.65 (0.7) (6.4) 2.79 7.54

Source: Company, DBS Bank

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 Company Focus
Cityneon Holdings

DBS Bank recommendations are based an Absolute Total Return* Rating system, defined as follows:
STRONG BUY (>20% total return over the next 3 months, with identifiable share price catalysts within this time frame)
BUY (>15% total return over the next 12 months for small caps, >10% for large caps)
HOLD (-10% to +15% total return over the next 12 months for small caps, -10% to +10% for large caps)
FULLY VALUED (negative total return i.e. > -10% over the next 12 months)
SELL (negative total return of > -20% over the next 3 months, with identifiable catalysts within this time frame)
Share price appreciation + dividends

GENERAL DISCLOSURE/DISCLAIMER
This report is prepared by DBS Bank Ltd. This report is solely intended for the clients of DBS Bank Ltd and DBS Vickers Securities (Singapore) Pte
Ltd, its respective connected and associated corporations and affiliates (collectively, the “DBS Vickers Group”) only and no part of this document
may be (i) copied, photocopied or duplicated in any form or by any means or (ii) redistributed without the prior written consent of DBS Bank Ltd.

The research set out in this report is based on information obtained from sources believed to be reliable, but we (which collectively refers to DBS
Bank Ltd., its respective connected and associated corporations, affiliates and their respective directors, officers, employees and agents (collectively,
the “DBS Group”)) do not make any representation or warranty as to its accuracy, completeness or correctness. Opinions expressed are subject to
change without notice. This document is prepared for general circulation. Any recommendation contained in this document does not have regard
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addressees only and is not to be taken in substitution for the exercise of judgement by addressees, who should obtain separate independent legal
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persons associated with any of them may from time to time have interests in the securities mentioned in this document. The DBS Group may have
positions in, and may effect transactions in securities mentioned herein and may also perform or seek to perform broking, investment banking and
other banking services for these companies.

Any valuations, opinions, estimates, forecasts, ratings or risk assessments herein constitutes a judgment as of the date of this report, and there can
be no assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or risk assessments.
The information in this document is subject to change without notice, its accuracy is not guaranteed, it may be incomplete or condensed and it
may not contain all material information concerning the company (or companies) referred to in this report.

The valuations, opinions, estimates, forecasts, ratings or risk assessments described in this report were based upon a number of estimates and
assumptions and are inherently subject to significant uncertainties and contingencies. It can be expected that one or more of the estimates on
which the valuations, opinions, estimates, forecasts, ratings or risk assessments were based will not materialize or will vary significantly from actual
results. Therefore, the inclusion of the valuations, opinions, estimates, forecasts, ratings or risk assessments described herein IS NOT TO BE RELIED
UPON as a representation and/or warranty by the DBS Group (and/or any persons associated with the aforesaid entities), that:

(a) such valuations, opinions, estimates, forecasts, ratings or risk assessments or their underlying assumptions will be achieved, and
(b) there is any assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or risk
assessments stated therein.

Any assumptions made in this report that refers to commodities, are for the purposes of making forecasts for the company (or companies)
mentioned herein. They are not to be construed as recommendations to trade in the physical commodity or in the futures contract relating to the
commodity referred to in this report.

DBS Vickers Securities (USA) Inc ("DBSVUSA")"), a U.S.-registered broker-dealer, does not have its own investment banking or research
department, has not participated in any public offering of securities as a manager or co-manager or in any other investment banking transaction
in the past twelve months and does not engage in market-making.

ANALYST CERTIFICATION
The research analyst(s) primarily responsible for the content of this research report, in part or in whole, certifies that the views about the
companies and their securities expressed in this report accurately reflect his/her personal views. The analyst(s) also certifies that no part of his/her
compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report. As of 30 May 2016,
the analyst(s) and his/her spouse and/or relatives who are financially dependent on the analyst(s), do not hold interests in the securities
recommended in this report (“interest” includes direct or indirect ownership of securities).

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 Company Focus
Cityneon Holdings

COMPANY-SPECIFIC / REGULATORY DISCLOSURES

1. DBS Bank Ltd, DBS Vickers Securities (Singapore) Pte Ltd (''DBSVS''), their subsidiaries and/or other affiliates do not have a proprietary
position in the securities recommended in this report as of 30 Apr 2016

2. DBS Bank Ltd does not market make in equity securities of the issuer(s) or company(ies) mentioned in this Research Report.

3. Compensation for investment banking services:

DBSVUSA does not have its own investment banking or research department, nor has it participated in any public offering of securities
as a manager or co-manager or in any other investment banking transaction in the past twelve months. Any US persons wishing to
obtain further information, including any clarification on disclosures in this disclaimer, or to effect a transaction in any security discussed
in this document should contact DBSVUSA exclusively.

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Distribution of this report is intended only for “wholesale investors” within the meaning of the CA.

Hong Kong This report is being distributed in Hong Kong by DBS Vickers (Hong Kong) Limited which is licensed and regulated by the
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and associated corporations, affiliates, their directors, officers, employees, agents and parties related or associated with
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or seek to perform broking, investment banking/corporate advisory and other services for the subject companies. They
may also have received compensation and/or seek to obtain compensation for broking, investment banking/corporate
advisory and other services from the subject companies.

Wong Ming Tek, Executive Director, ADBSR

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Dubai This research report is being distributed in The Dubai International Financial Centre (“DIFC”) by DBS Bank Ltd., (DIFC
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person may act upon it.

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 Company Focus
Cityneon Holdings

United States This report was prepared by DBS Bank Ltd. DBSVUSA did not participate in its preparation. The research analyst(s)
named on this report are not registered as research analysts with FINRA and are not associated persons of DBSVUSA. The
research analyst(s) are not subject to FINRA Rule 2241 restrictions on analyst compensation, communications with a
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referred to herein should contact DBSVUSA directly and not its affiliate.

Other jurisdictions In any other jurisdictions, except if otherwise restricted by laws or regulations, this report is intended only for qualified,
professional, institutional or sophisticated investors as defined in the laws and regulations of such jurisdictions.

DBS Bank Ltd

12 Marina Boulevard, Marina Bay Financial Centre Tower 3
Singapore 018982
Tel. 65-6878 8888
Company Regn. No. 196800306E

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