Potentially raising up to IDR 2.4 trillion. In its IPO, CNMA will release up to 10% of its total shares outstanding (approximately 83 billion shares) to the public. With a bookbuilding price range of IDR 270 - IDR 288, CNMA is expected to raise IDR 2.2 – 2.4 trillion from its IPO, of which 65% will be used for cinema expansion, particularly in tier-2 cities, 20% will be used to pay off its debt to Bank BRI, and the rest will be used as working capital. With the aforementioned bookbuilding price range, CNMA’s market cap is projected to reach IDR 22.5 – IDR 24 trillion.
F&B-driven movie theater. In FY22, CNMA added three new cinemas and ten new screens to its network, bringing its portfolio to 225 cinemas and 1,216 screens, with an average revenue per ticket of IDR 44,258. CNMA’s business model is fairly straightforward; CNMA will sign 50-50 profit-sharing contracts with movie producers (pre-tax) and then show the movies in its cinemas. In 2022, CNMA reported an average daily revenue per cinema of IDR 32.8 million, tripling the previous year’s figure, largely thanks to economic reopening and recovery of mobility. Despite the massive success of its cinemas, CNMA’s bottom line driver is actually its F&B business; in 2022, CNMA recorded 15.3 million F&B transactions, generating more than IDR 1.7 trillion of revenue in the process. In addition, CNMA’s F&B business offers more lucrative margins (GPM: 72%, EBITDA margin: 58%, NPM: 42%. Its F&B-driven bottom line is the unique value that sets CNMA apart from its peers in the US and Asia.
Possibility of huge investments from existing shareholder. According to its prospectus, on December 5, 2016, CNMA signed a call option agreement with Salween Investment Private Limited, the investment vehicle of GIC. In the agreement, CNMA, through its largest shareholder, PT Harkatjaya Bumipersada (HJB), will provide the option for Salween to purchase as much as 15 billion CNMA shares, while PT Adi Pratama Nusantara (APN) will provide the same option for 3.75 billion shares. The strike price is the same as the IPO offering price, and the options will be valid at the listing date. Should GIC exercise all of the options, it will then hold a 22.51% stake in CNMA (value: IDR 5 – IDR 5.4 trillion).
Discount to global & regional peers. With total shares outstanding of 83.3 billion, CNMA is offered at 14.6x – 15.5x FY23F EV/EBITDA (30% discount to global & regional peers), assuming an annualized FY23F EBITDA of IDR 1.4 trillion. We chose to use EV/EBITDA multiple as movie theatre companies tend to have their value tied to their cinemas and screens, whose value depreciates heavily throughout the years.