The Motley Fool

Why Have Cityneon Holdings Limited’s Shares Surged By 382% Over The Last 9 Months?

Cityneon Holdings Limited (SGX: 5HJ) has been an outstanding performer in Singapore’s stock market over the past nine months since the start of October 2015. In that timeframe, shares of the company have soared by 382% in price from S$0.175 to S$0.845.

For perspective, Singapore’s market barometer, the Straits Times Index (SGX: ^STI), has inched up by just 1.4%.

This raises the question: What has happened to Cityneon’s business to lead to that big surge in its share price?

New room for growth

Cityneon’s stupendous gains could perhaps be traced to its April 2015 agreement to acquire exhibitions producer and distributor Victory Hill Exhibition for $19 million (S$10 million in cash with the remaining S$9 million being paid with 45 million new shares of Cityneon).

The acquisition could cost even more, as Cityneon also agreed some additional incentive payments if Victory Hill could achieve certain profit targets by the end of this month.

At the time of the acquisition, Victory Hill already held the rights to produce and run interactive exhibitions that help to promote characters from Marvel’s Avengers franchise.

The Avengers movie series – along with the other movies linked to important characters in the series, such as Captain America – have done very well in the box office. There are also over 10 movies in the Marvel Cinematic Universe that are slated to come online from now till 2020. These new movies, if they do well, could represent new business for Victory Hill to win as well as provide a halo effect for the company’s existing exhibitions.

The market could also be excited about Cityneon because of recent research reports from analysts. One such report, released at the end of May, estimated that Cityneon’s earnings per share in 2018 could be over 2,300% higher from the 2015 level of 0.39 Singapore cents.

Let’s see what the future may bring for Cityneon.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Ong Kai Kiat does not own shares in any companies mentioned.