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Wednesday, December 7, 2016

Spackman (SEGL) - Presold Distribution Rights To More Than 30 Countries

This is a quick follow-up updates on the recent post I made last week on Spackman (Link Here) where I bought the shares based on a few catalysts play ahead.

The Group's upcoming premiere movie "Masters" is one of the catalyst play and the company announced yesterday that they had successfully sold their distribution rights to 31 countries.

The movie is expected to premiere in Korea on the 21st December and they are expected to do well, very well in fact as expectations are running high. Given the level of distribution rights sold to the various number of countries, I think we can expect the movie to be a big hit.

I mentioned in my previous post that we can take reference from their previous big hit movie produced, "The Priests". They managed to successfully earned a 50% margin on the production and distribution on rights and we can expect this to go a step level better.

If you'd bothered to notice the way they made the announcement on "The Priests", the company made 7 consecutive positive announcement on the successful production of the movie since it was premiered. The share price meanwhile has rallied double from the beginning of Nov (8 cents) to the end of Nov (16 cents). That's in 2015 and the share price tumbled again upon the announcement of their full year results.

For the record, "The Priests" has only managed to sold distribution rights to 5 countries.



My Take

I attended training outside today so I didn't really see the market movement today but I was told the share price went up 11% today on high volume.

I think we'll see a similar stretch of good news announcement coming towards nearer to the screening premiere of the movie and I feel there are still plenty of room to run up for the share price meanwhile. Being in a FP&A work myself, I know how easy it is for a company to announce some positive news which will delight the investors.

I spoke about what it means in terms of valuation in my previous post. At 22 cents, they are valued at around 15x PE. If we look across other competitors like MM2 and other Korean production company, they are all trading above 30x and some nearer to 45x.

I think the safest play for me is still to hold this on until the premiere starts on the last week of December but probably exit just before their full year results. We know how sensitive companies can be when they announce results so I probably don't want to take that risks.

This is just me thinking of the risk vs reward play.

I will never put my money into areas where I think the risk are higher than my rewards.


12 comments:

  1. Hi B, looks like you will be reaping your Christmas present soon.

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    Replies
    1. Hi LCL

      Haha, I didnt realize the movie was so close to xmas. Perhaps its their strategy to always release them during the festive period.

      Delete
  2. Hi B,
    Sorry to ask but this strategy seems to be more on trader than investor?

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    Replies
    1. Hi Anonymous

      Yes you are right, this was one of my calculated punt strategy than the traditional long term strategy of buy and hold.

      Having said that, it's still a risk reward calculated play which I thought was tilted towards the reward hence the buy. It's definitely not a blind trade where I throw a dart and hoping it will end up in the right spot.

      Delete
  3. Congratulation for huge gain:)

    ReplyDelete
    Replies
    1. Thank you but its too soon to count the eggs before it hatched.

      Delete
  4. Replies
    1. Its still too soon to count the eggs before it hatched so I'd probably not want to celebrate it yet :)

      Delete
  5. I must admit, this is one stock I have never even heard about. Fantastic catalyst play, impressive! Congrats!

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  6. Hi B,

    Similar to yourself I entered Spackman at 0.14. Be always cautious on this counter. Too much speculation going on and it is merely a short term play. Btw, I exited at 0.162. Good luck :)

    Best,
    Anon

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  7. Hi B, Spackman is currently hanging on for dear life at 0.168 but my observation is that it is trading in range from 0.168-01.74 and that the uptrend is still in take with good news such as the MOU for the proposed acquisition of Frame Pictures. Appreciate your views on this.

    ReplyDelete
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