Rating Company Buy Wanda Cinema -...

Deutsche Bank Markets Research

Rating

Buy Asia

China

Consumer

Hotels / Leisure / Gaming

Company

Wanda Cinema

Date

2 September 2015

Recommendation Change

Strategic investment in Mtime to consolidate market; upgrading to Buy

Reuters Bloomberg Exchange Ticker 002739.SZ 002739 CH SHZ 002739

Forecasts And Ratios

Year End Dec 31 2013A 2014A 2015E 2016E 2017E

Sales (CNYm) 4,022.6 5,339.0 7,313.1 13,677.7 17,204.4

EBITDA (CNYm) 961.7 1,310.2 1,793.0 3,228.1 4,133.4

Reported NPAT (CNYm) 602.5 801.0 1,183.1 1,923.5 2,541.2

DB EPS FD(CNY) 1.21 1.60 2.11 3.36 4.44

DB EPS growth (%) 55.2 32.9 31.9 59.1 32.1

PER (x) – – 67.3 42.3 32.0

EV/EBITDA (x) – – 42.9 25.4 19.6

DPS (net) (CNY) 0.00 0.80 1.18 1.71 2.25

Yield (net) (%) – – 0.8 1.2 1.6

Source: Deutsche Bank estimates, company data 1 DB EPS is fully diluted and excludes non-recurring items 2 Multiples and yields calculations use average historical prices for past years and spot prices for current and future years, except P/B which uses

the year end close

Upgrade China's leading cinema company, Wanda Cinema, to Buy rating

________________________________________________________________________________________________________________

Deutsche Bank AG/Hong Kong

Deutsche Bank does and seeks to do business with companies covered in its research reports. Thus, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. DISCLOSURES AND ANALYST CERTIFICATIONS ARE LOCATED IN APPENDIX 1. MCI (P) 124/04/2015.

Price at 2 Sep 2015 (CNY) 142.27

Price target - 12mth (CNY) 202.00

52-week range (CNY) 244.89 - 30.74

HANG SENG INDEX 21,185

Tallan Zhou

Research Analyst

(+852) 2203 6464

[email protected]

Karen Tang

Research Analyst

(+852) 2203 6141

[email protected]

Key changes

Rating Hold to Buy ↑

Source: Deutsche Bank

Price/price relative

0

40

80

120

160

200

240

280

1/15 7/15

Wanda Cinema

HANG SENG INDEX (Rebased)

Performance (%) 1m 3m 12m

Absolute -17.5 -41.9 –

HANG SENG INDEX -14.0 -22.9 -14.4


We upgrade Wanda Cinema to Buy from Hold after a recent share price pull-back and more attractive valuation. In addition, Wanda Cinema announced a strategic investment of a 20% stake in Mtime, a leading movie platform in China. As we mentioned in our initiation report, the company continues to consolidate the market through investments in domestic theatre chains, upstream producers, overseas operators, and online platforms. We like Wanda's strong fundamentals and high growth potential, organically and through consolidation.

Strategic investment in Mtime, a leading movie e-platform Wanda Cinema announced it will invest in a 20% stake in Mtime Holdings, a leading China online platform for movie information, film review community, online ticketing and movie byproduct retailing. With this strategic investment, Wanda plans to invest in the ecommerce O2O business and build better connections between movie screening, and film promotion and movie byproduct retailing. We believe the investment will support the development of Wanda’s “Member+” strategy to build a strong eco-system.

Continues to consolidate the market In July 2015, Wanda announced three 100% acquisitions: the Shimao theatre chain, along with film production and investment company Muwei Cultural Media and the Australia-based Hoyt’s chain. The company’s strategic investment in Mtime marks its fourth consolidation move in 2015, and we expect further consolidation in the sector.

Valuation seems more attractive after share price pull-back; risks We derive our target price of RMB202 on DCF-based valuation with WACC of 8.3% and a terminal growth rate of 4% for structural growth in China’s film industry. The stock is trading at 46x our 2016E EPS, which implies 1.5x PEG on our 30% earnings CAGR over 2016-18E. Key risks include loss of policy support from the government, piracy issues and competition from online media.

2 September 2015


Wanda Cinema


Model updated:01 September 2015

Running the numbers

Asia

China


Wanda Cinema Reuters: 002739.SZ Bloomberg: 002739 CH

Buy Price (2 Sep 15) CNY 142.27

Target Price CNY 202.00

52 Week range CNY 30.74 - 244.89

Market Cap (m) CNYm 79,671

USDm 12,513

Company Profile

Wanda Cinema was founded in January 2005 and has been ranked as the No.1 theatre circuit in China in terms of box office since 2009. As of July 2015, the company operates 195 theatres with over 1,700 screens across China.

Price Performance

04080

120160200240280

Jan 15 Apr 15 Jul 15

Wanda CinemaHANG SENG INDEX (Rebased)

Margin Trends

14161820222426

12 13 14 15E 16E 17E

EBITDA Margin EBIT Margin

Growth & Profitability

252627282930313233

0

20

40

60

80

100

12 13 14 15E 16E 17E

Sales growth (LHS) ROE (RHS)

Solvency

0

50

100

150

-80

-60

-40

-20

0

20

40

12 13 14 15E 16E 17E

Net debt/equity (LHS) Net interest cover (RHS)

Tallan Zhou

+852 2203 6464 [email protected]

Fiscal year end 31-Dec 2012 2013 2014 2015E 2016E 2017E

Financial Summary

DB EPS (CNY) 0.78 1.21 1.60 2.11 3.36 4.44

Reported EPS (CNY) 0.78 1.21 1.60 2.11 3.36 4.44

DPS (CNY) 0.00 0.00 0.80 1.18 1.71 2.25

BVPS (CNY) 3.2 4.4 6.0 8.6 13.8 16.6

Weighted average shares (m) 500 500 500 560 572 572

Average market cap (CNYm) na na na 79,671 79,671 79,671

Enterprise value (CNYm) na na na 76,876 81,852 80,880

Valuation Metrics P/E (DB) (x) na na na 67.3 42.3 32.0

P/E (Reported) (x) na na na 67.3 42.3 32.0

P/BV (x) 0.00 0.00 0.00 16.61 10.31 8.59

FCF Yield (%) na na na 1.2 1.6 3.2

Dividend Yield (%) na na na 0.8 1.2 1.6

EV/Sales (x) nm nm nm 10.5 6.0 4.7

EV/EBITDA (x) nm nm nm 42.9 25.4 19.6

EV/EBIT (x) nm nm nm 56.8 33.1 24.9

Income Statement (CNYm)

Sales revenue 3,031 4,023 5,339 7,313 13,678 17,204

Gross profit 1,031 1,399 1,830 2,524 4,331 5,607

EBITDA 745 962 1,310 1,793 3,228 4,133

Depreciation 276 154 183 246 498 577

Amortisation 0 124 178 194 255 312

EBIT 469 684 949 1,353 2,475 3,243

Net interest income(expense) -3 5 15 26 -179 -227

Associates/affiliates 0 0 0 0 0 0

Exceptionals/extraordinaries -2 -6 -27 -4 0 0

Other pre-tax income/(expense) 62 106 120 187 256 356

Profit before tax 526 789 1,057 1,562 2,553 3,373

Income tax expense 135 184 255 376 626 827

Minorities 2 2 2 2 3 5

Other post-tax income/(expense) 0 0 0 0 0 0

Net profit 388 603 801 1,183 1,924 2,541

DB adjustments (including dilution) 0 0 0 0 0 0

DB Net profit 388 603 801 1,183 1,924 2,541

Cash Flow (CNYm)

Cash flow from operations 884 1,300 1,652 1,616 2,485 3,233

Net Capex -553 -537 -672 -662 -1,195 -622

Free cash flow 330 762 980 954 1,290 2,611

Equity raised/(bought back) 0 0 0 1,240 1,840 0

Dividends paid 0 0 0 -448 -662 -960

Net inc/(dec) in borrowings 0 0 0 0 0 0

Other investing/financing cash flows 27 -283 -409 -691 -5,051 -680

Net cash flow 357 480 571 1,055 -2,582 971

Change in working capital 350 208 253 -7 -37 -23

Balance Sheet (CNYm)

Cash and other liquid assets 695 1,175 1,746 2,801 219 1,190

Tangible fixed assets 989 1,089 1,268 1,674 6,792 6,986

Goodwill/intangible assets 7 27 62 64 2,611 2,610

Associates/investments 0 0 0 0 0 0

Other assets 907 1,162 1,498 1,983 2,628 3,311

Total assets 2,598 3,452 4,574 6,522 12,250 14,097

Interest bearing debt 0 0 0 0 2,394 2,394

Other liabilities 998 1,249 1,570 1,720 1,953 2,219

Total liabilities 998 1,249 1,570 1,720 4,347 4,613

Shareholders' equity 1,595 2,197 2,998 4,796 7,897 9,479

Minorities 5 6 5 6 6 6

Total shareholders' equity 1,600 2,203 3,003 4,801 7,903 9,485

Net debt -695 -1,175 -1,746 -2,801 2,175 1,203

Key Company Metrics

Sales growth (%) 37.2 32.7 32.7 37.0 87.0 25.8

DB EPS growth (%) 27.2 55.2 32.9 31.9 59.1 32.1

EBITDA Margin (%) 24.6 23.9 24.5 24.5 23.6 24.0

EBIT Margin (%) 15.5 17.0 17.8 18.5 18.1 18.9

Payout ratio (%) 0.0 0.0 49.9 55.9 51.0 50.7

ROE (%) 27.7 31.8 30.8 30.4 30.3 29.2

Capex/sales (%) 18.3 13.4 12.6 9.1 8.7 3.6

Capex/depreciation (x) 2.0 1.9 1.9 1.5 1.6 0.7

Net debt/equity (%) -43.5 -53.3 -58.1 -58.3 27.5 12.7

Net interest cover (x) 137.1 nm nm nm 13.9 14.3

Source: Company data, Deutsche Bank estimates

2 September 2015


Wanda Cinema


Strategic investment in Mtime

Mtime Holdings

Mtime Holdings, established in 2006, is a Chinese movie platform similar to

IMDB. The platform allows online movie ticketing purchasing, provides movie

information and film reviews, and sells movie-related merchandise. According

to BigData-Research, Mtime ranks as the number two movie app in China in

terms of number of monthly active users, which came in at 0.61m in 1Q15.

Figure 1: Monthly active users (MAU) in 1Q15, million

0.02

0.04

0.06

0.06

0.13

0.14

0.14

0.60

0.61

0.74

- 0.20 0.40 0.60 0.80

哈票网Hipiao

院线通198mv.cn

QQ电影票QQ

网易电影票NetEase

电影网1095.com

豆瓣电影Douban

万达电影Wanda

猫眼电影Maoyan

时光网Mtime

格瓦拉Gewara

MAU, mill ion

Source: Deutsche Bank, BigData-Research

The website (mtime.com) has five main sections: news, theatre, mall,

community and discovery.

The news section provides the latest information on film production,

movie screening, updates on actors and actresses, and information on

TV shows, music and gossip. Mtime has the largest film database in

Chinese.

The theatre session enables users to purchase movie tickets online by

filtering city, theatre and/or film.

The mall sells movie-related merchandise and is one of the leading

movie byproduct sales platforms in China.

The community is where movie viewers and critics post film reviews,

and Mtime also organizes online events throughout the year. Mtime is

one of the largest film review platforms in the country.

In discovery, users can find various movie rankings, TV show rankings

and rankings of popular actors and actresses.

2 September 2015


Wanda Cinema


Figure 2: Theatre – movie ticketing on Mtime Figure 3: Mall – movie byproducts retailing on Mtime

Source: Deutsche Bank, mtime.com


Figure 4: Community – film reviews on Mtime Figure 5: Discovery – film rankings on Mtime



Wanda’s Member+ strategy

Wanda Cinema introduced a Member+ strategy and plans to build a Member+

eco-system using its large membership base as building blocks. The eco-

system has four main parts:

An open movie-ticketing e-commerce platform.

Paid “online theatres” focusing on movies and sport events.

Movie-related product stores: the company plans to open more than

20 by 2015 and 80-100 more stores in 2016.

Cooperation with companies in different industries such as partnership

with Tencent on movie-related games, and fashion brands.

2 September 2015


Wanda Cinema


Mtime to facilitate the development of Member+ strategy

We believe the strategic investment in Mtime provides Wanda Cinema with a

broader user base and a well developed online movie review and promotion

platform.

Wanda could create synergies between its strong offline theatre chains and

Mtime’s user base, and develop a well rounded open O2O platform that serves

all film producers, theatre operators and movie viewers.

2 September 2015


Wanda Cinema


Upgrade to Buy

We believe Wanda’s valuation has become more attractive after the recent

share price pull-back. We upgrade the stock to Buy from Hold.

We maintain our estimate on Wanda Cinema and leave unchanged our DCF-

based target price of RMB202. We like Wanda Cinema’s fundamental story,

and see upside potential to the company’s current valuation after the recent

market adjustment. Our price target implies upside of 25%.

DCF-based valuation

Our key valuation assumptions remain the same:

WACC of 8.3%.

Target 75% equity for its capital structure, as guided by management.

The company is now in a net cash position.

Cost of equity of 9.5%.

A risk-free rate of 3.9% and market risk premium of 5.6% (in line

with our in-house estimates).

A beta of 1.0 (we are being conservative here). Wanda IPO-ed in

the A share market on 22 January 2015; given its short trading

history, we see no comparable domestic peers. To be conservative,

we assume a beta of 1.0 in our DCF-based valuation.

Cost of debt of 6.0% (our in-house estimates).

Terminal growth of 4%.

A tax rate of 25% (for terminal growth).

Figure 6: DCF assumption, unchanged

Our assumptions

Equity as % of capital structure 75%

Beta 1.00

Risk free rate 3.9%

Equity risk premium 5.6%

Cost of equity 9.5%

Debt as % of capital structure 25%

Cost of debt 6.0%

Tax rate (for discount rate calculation) 25%

Terminal growth rate 4.0%

WACC 8.3% Source: Deutsche Bank estimates

2 September 2015


Wanda Cinema


Figure 7: Our DCF valuation, unchanged

RMB million 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E

Revenue 13,678 17,204 21,187 25,344 29,906 34,690 39,547 44,293 48,722 53,594

EBIT 2,475 3,243 4,058 4,985 5,942 6,962 8,016 9,066 10,070 11,184

Tax Rate 24.5% 24.5% 24.5% 24.4% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0%

Tax (607) (795) (994) (1,218) (1,485) (1,740) (2,004) (2,267) (2,518) (2,796)

NOPAT 1,869 2,448 3,064 3,767 4,456 5,221 6,012 6,800 7,553 8,388

D&A 599 715 847 977 1,064 1,130 1,169 1,177 1,148 890

Capex (1,195) (622) (750) (725) (766) (785) (776) (736) (809) (890)

Change Working Cap (37) (23) (8) (57) (68) (78) (89) (100) (110) (121)

FCF 1,235 2,518 3,153 3,962 4,686 5,488 6,316 7,140 7,781 8,267 Source: Deutsche Bank estimates

Figure 8: Our DCF valuation, cont’d

Items (RMB million)

Discounted FCF 118,036

WACC 8.3%

Net Debt 2,175

Minority Interest (84)

Equity Value 115,777

Shares Outstanding 572

Value per Share (RMB) 202 Source: Deutsche Bank

Sensitivity analysis of terminal growth and WACC

Figure 9: Sensitivity analysis

WACC

RMB 202 6.3% 6.8% 7.3% 7.8% 8.3% 8.8% 9.3% 9.8% 10.3% 10.8%

Term

inal G

row

th R

ate

3.4% 333 278 238 207 182 162 146 132 120 110

3.6% 355 293 249 215 188 167 150 135 123 113

3.8% 380 310 260 224 195 172 154 139 126 115

4.0% 410 329 274 233 202 178 158 142 129 117

4.2% 445 352 289 244 210 184 163 146 132 120

4.4% 488 378 306 256 219 191 168 150 135 122

4.6% 542 409 326 270 229 198 174 154 138 125 Source: Deutsche Bank

Valuation is reasonable after market adjustment

After market adjustments over the past one month, Wanda is now trading at

46x our forecast 2016 EPS. This implies a PEG of 1.5x on our earnings CAGR of

30% over 2016-18E.

We see upside potential in the company’s current valuation, given its strong

fundamentals and rapid expansion pace with theatre development and

consolidation.

Wan

da C

inem

a

Ho

tels / L

eisu

re / G

am

ing

2 S

ep

tem

ber 2

01

5

Pag

e 8

D

eu

tsch

e B

an

k A

G/H

on

g K

on

g

Figure 10: Valuation comp sheet

Share price Mkt. Cap Return PER P/BV EV/EBITDA PEG DB

Ticker Company Name Loc. currency (USDm) ROE FY15 FY16 FY15 FY15 FY16 FY15 FY16 Recomm

002739 CH Equity Wanda Cinema Line Co Ltd 156 13,721 30% 73.8x 46.4x 18.2x 47.2x 27.4x 2.4x 0.8x Buy

000802 CH Equity Beijing Jingxi Tourism Development Co Ltd 19 1,162 9% 79.7x 49.9x 8.1x 30.6x 18.5x 1.3x 2.4x NR

300027 CH Equity Huayi Brothers Media Corp 40 8,587 19% NA 35.9x 8.3x NA 31.5x NA 1.8x NR

300291 CH Equity Beijing HualuBaina Film & TV Co Ltd 20 2,192 6% 39.6x 27.9x 3.9x 33.0x 21.2x 1.1x 0.9x NR

300251 CH Equity Beijing Enlight Media Co Ltd 23 5,308 12% 59.4x 42.5x 9.6x 53.5x 39.5x 1.9x 1.3x NR

300133 CH Equity Zhejiang Huace Film & TV Co Ltd 25 3,791 15% 36.7x 27.4x 7.2x 31.3x 23.5x 1.2x 0.6x NR

300336 CH Equity Shanghai New Culture Media Group Co Ltd 18 1,513 12% 24.4x 17.9x 7.3x 21.7x 17.6x 0.9x 0.7x NR

300144 CH Equity Songcheng Performance Development Co Ltd 16 3,680 14% 41.2x 28.7x 4.6x 22.5x 15.6x 0.6x 0.7x Buy

Average 13% 1.2x 1.2x

AMC US Equity AMC Entertainment Holdings Inc 29 2,823 6% 21.4x 19.7x 1.9x 8.3x 7.9x 0.2x 1.0x NR

IMAX US Equity IMAX Corp 31 2,200 13% 25.8x 24.0x 5.1x 13.6x 12.5x NA 1.5x NR

BONA US Equity Bona Film Group Ltd 12 751 3% 21.5x 25.2x 3.1x 17.8x 11.0x 0.8x 0.8x NR

FOXA US Equity Twenty-First Century Fox Inc 27 63,971 48% 16.2x 15.6x 3.4x 9.9x 10.0x 1.4x 4.0x Buy

TWX US Equity Time Warner Inc 71 64,584 16% 15.3x 12.4x 2.4x 9.9x 8.8x 1.3x 0.5x Buy

CNK US Equity Cinemark Holdings Inc 36 4,121 17% 16.0x 15.3x 3.7x 8.1x 7.8x 0.6x 1.2x NR

RGC US Equity Regal Entertainment Group 19 2,976 NA 16.4x 15.7x NA 8.1x 7.9x NA 2.7x NR

Average 17% 0.9x 1.7x Source: Deutsche Bank, Bloomberg Finance LP Note: PEG here is calculated using 2015/16 PER over 2015/16 EPS growth

2 September 2015


Wanda Cinema


2H15 outlook

We are conservative in our 2H15 forecast

We forecast revenue growth of 34% yoy in 2H15 to RMB3.8bn,

compared with 41% yoy in 1H15. We expect full-year revenue to grow

37% yoy in 2015 to RMB7.3bn.

Wanda’s revenue may outperform our forecast, as several great

domestic and international movies have screened in recent

months. Domestic films such as Monster Hunt, Jian Bing Man and

Monkey King shown in July 2015, and Go Away Mr Tumour, The

Dead End and The Assassin shown in August 2015 all received

positive reviews and high scores on Douban. Popular Hollywood

movie Germinator Genisys just came on screen in late August, and

Mission Impossible: Rouge Nation and Minions are coming into

cinemas in September.

Wanda’s monthly operational data showed strong box office

admission revenue growth of 50% yoy in July 2015, compared

with 43% yoy in 1H15.

We expect gross margin to remain flat in 2H15, vs. a 0.5ppt

improvement in 1H15. In our view, as the company plans to introduce

31 new theatres in 2H15, the lower margin associated with newly

opened theatres could pull down the gross margin of the box office

admission business.

We estimate 2H15 net profit will grow 45% yoy to RMB555m in 2H15,

compared with 50% yoy growth in 1H15. We expect 2H15 EPS to

come in at RMB0.97, up 27% yoy, due to the dilation effect of the IPO.

Figure 11: Operation data, Jan-Jul 2015

380

550

420

595

450 455

750

0%

20%

40%

60%

80%

100%

120%

140%

300

350

400

450

500

550

600

650

700

750

800

Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15

Box office (RMB m, LHS) yoy (%, RHS)


2 September 2015


Wanda Cinema


Figure 12: 2H15-2016E outlook

RMBm 2H14 2H15E yoy% 2015E 2016E

Revenue 2,863 3,827 34% 7,313 13,678

Revenue breakdown

Wanda 2,863 3,827 34% 7,313 10,311

Box office 2,192 2,844 30% 5,609 7,807

Retail 330 495 50% 893 1,380

Others 341 487 43% 811 1,124

Hoyts - - na - 2,361

Shimao - - na - 526

Muwei - - na - 480

Gross profit 991 1,326 34% 2,524 4,331

Gross margin % 35% 35% 0ppt 35% 32%

Gross profit breakdown

Wanda 991 1,305 32% 2,503 3,565

Box office 433 489 13% 1,099 1,521

Retail 227 345 52% 615 950

Others 331 471 42% 790 1,094

Hoyts - - na - 438

Shimao - - na - 163

Muwei - - na - 135

Gross margin breakdown

Wanda 35% 34% -0.5% 34% 35%

Box office 20% 17% -2.6% 20% 19%

Retail 69% 70% 0.9% 69% 69%

Others 97% 97% -0.3% 97% 97%

Hoyts na na na na 19%

Shimao na na na na 31%

Muwei na na na na 28%

SG&A (552) (732) 33% (1,171) (1,856)

EBITDA 635 822 29% 1,793 3,228

EBIT 439 594 35% 1,353 2,476

EBIT margin % 15% 16% 0.2ppt 19% 18%

Pre-tax profit 511 735 44% 1,563 2,553

Net profit 383 555 45% 1,184 1,924

EPS (RMB) 0.77 0.97 27% 2.11 3.36

Source: Deutsche Bank estimate, Company data

2 September 2015


Wanda Cinema


Risks

Downside risks

Removal of tax exemption and/or government subsidies. VAT on films

screening in suburban areas is currently exempted. In addition, the

authority returns part of the film funds, based on the screening of

domestic films and digital screening infrastructure. The removal of tax

exemption and/or government subsidies could negatively affect

Wanda’s profitability.

Piracy. Piracy has always been an issue in China, where unauthorised

parties create copies without copyright. Pirated copies are distributed

in the market at significantly lower costs and this damages the

operating environment of theatre circuits.

Competition from online distribution and new media. As the internet is

becoming increasingly accessible, online entertainment poses a threat

to traditional theatre operators. Online video sites such as Youku and

web-based show platforms such as YY offer consumers much cheaper

film viewing and/or entertainment. Nonetheless, we believe theatres

provide a much better movie watching experience than new media,

and would not be replaced by new media.

Lack of supply from upstream film producers. Supply of high-quality

films drives demand and impacts the box office. The quality of films is

directly linked to their box office revenues. China currently has a quota

on the number of foreign films and the supply of high-quality domestic

films is limited. A lack of high-quality films could hurt box office

revenue.

Poor theatre locations. The choice of new theatres’ locations is

important and has a deep impact on movie viewer volume. Poor

decisions on theatre location could result in low return.

Increase in rental fees. Wanda’s theatres operate on an asset-light

model, and pay a rental fee based on box office revenue. Currently,

Wanda pays c. 11% of the box office as rental fee and an increase in

the percentage could directly affect its profit margin.

2 September 2015


Wanda Cinema


Appendix 1

Important Disclosures

Additional information available upon request

Disclosure checklist

Company Ticker Recent price* Disclosure

Wanda Cinema 002739.SZ 142.27 (CNY) 2 Sep 15 NA *Prices are current as of the end of the previous trading session unless otherwise indicated and are sourced from local exchanges via Reuters, Bloomberg and other vendors . Other information is sourced from Deutsche Bank, subject companies, and other sources. For disclosures pertaining to recommendations or estimates made on securities other than the primary subject of this research, please see the most recently published company report or visit our global disclosure look-up page on our website at http://gm.db.com/ger/disclosure/DisclosureDirectory.eqsr. For disclosures pertaining to recommendations or estimates made on securities other than the primary subject of this research, please see the most recently published company report or visit our global disclosure look-up page on our website at http://gm.db.com/ger/disclosure/Disclosure.eqsr?ricCode=002739.SZ

Analyst Certification

The views expressed in this report accurately reflect the personal views of the undersigned lead analyst(s) about the subject issuer and the securities of the issuer. In addition, the undersigned lead analyst(s) has not and will not receive any compensation for providing a specific recommendation or view in this report. Tallan Zhou

Historical recommendations and target price: Wanda Cinema (002739.SZ) (as of 9/2/2015)

1

0.00

50.00

100.00

150.00

200.00

250.00

300.00

Jan 15 Apr 15 Jul 15

Secu

rity

Pri

ce

Date

Previous Recommendations

Strong Buy Buy Market Perform Underperform Not Rated Suspended Rating

Current Recommendations

Buy Hold Sell Not Rated Suspended Rating

*New Recommendation Structure as of September 9,2002

1. 14/08/2015: Upgrade to Hold, Target Price Change CNY202.00

2 September 2015


Wanda Cinema


Equity rating key Equity rating dispersion and banking relationships

Buy: Based on a current 12- month view of total share-holder return (TSR = percentage change in share price from current price to projected target price plus pro-jected dividend yield ) , we recommend that investors buy the stock. Sell: Based on a current 12-month view of total share-holder return, we recommend that investors sell the stock Hold: We take a neutral view on the stock 12-months out and, based on this time horizon, do not recommend either a Buy or Sell. Notes:

1. Newly issued research recommendations and target prices always supersede previously published research. 2. Ratings definitions prior to 27 January, 2007 were:

Buy: Expected total return (including dividends) of 10% or more over a 12-month period Hold: Expected total return (including dividends) between -10% and 10% over a 12-month period Sell: Expected total return (including dividends) of -10% or worse over a 12-month period

52 %

38 %

10 %24 %18 % 16 %

0

50

100

150

200

250

300

350

400

450

Buy Hold Sell

Asia-Pacific Universe

Companies Covered Cos. w/ Banking Relationship

Regulatory Disclosures

1.Important Additional Conflict Disclosures

Aside from within this report, important conflict disclosures can also be found at https://gm.db.com/equities under the

"Disclosures Lookup" and "Legal" tabs. Investors are strongly encouraged to review this information before investing.

2.Short-Term Trade Ideas

Deutsche Bank equity research analysts sometimes have shorter-term trade ideas (known as SOLAR ideas) that are

consistent or inconsistent with Deutsche Bank's existing longer term ratings. These trade ideas can be found at the

SOLAR link at http://gm.db.com.

2 September 2015


Wanda Cinema


Additional Information

The information and opinions in this report were prepared by Deutsche Bank AG or one of its affiliates (collectively

"Deutsche Bank"). Though the information herein is believed to be reliable and has been obtained from public sources

believed to be reliable, Deutsche Bank makes no representation as to its accuracy or completeness.

Deutsche Bank may consider this report in deciding to trade as principal. It may also engage in transactions, for its own

account or with customers, in a manner inconsistent with the views taken in this research report. Others within

Deutsche Bank, including strategists, sales staff and other analysts, may take views that are inconsistent with those

taken in this research report. Deutsche Bank issues a variety of research products, including fundamental analysis,

equity-linked analysis, quantitative analysis and trade ideas. Recommendations contained in one type of communication

may differ from recommendations contained in others, whether as a result of differing time horizons, methodologies or

otherwise. Deutsche Bank and/or its affiliates may also be holding debt securities of the issuers it writes on.

Analysts are paid in part based on the profitability of Deutsche Bank AG and its affiliates, which includes investment

banking revenues.

Opinions, estimates and projections constitute the current judgment of the author as of the date of this report. They do

not necessarily reflect the opinions of Deutsche Bank and are subject to change without notice. Deutsche Bank has no

obligation to update, modify or amend this report or to otherwise notify a recipient thereof if any opinion, forecast or

estimate contained herein changes or subsequently becomes inaccurate. This report is provided for informational

purposes only. It is not an offer or a solicitation of an offer to buy or sell any financial instruments or to participate in any

particular trading strategy. Target prices are inherently imprecise and a product of the analyst’s judgment. The financial

instruments discussed in this report may not be suitable for all investors and investors must make their own informed

investment decisions. Prices and availability of financial instruments are subject to change without notice and

investment transactions can lead to losses as a result of price fluctuations and other factors. If a financial instrument is

denominated in a currency other than an investor's currency, a change in exchange rates may adversely affect the

investment. Past performance is not necessarily indicative of future results. Unless otherwise indicated, prices are

current as of the end of the previous trading session, and are sourced from local exchanges via Reuters, Bloomberg and

other vendors. Data is sourced from Deutsche Bank, subject companies, and in some cases, other parties.

Macroeconomic fluctuations often account for most of the risks associated with exposures to instruments that promise

to pay fixed or variable interest rates. For an investor who is long fixed rate instruments (thus receiving these cash

flows), increases in interest rates naturally lift the discount factors applied to the expected cash flows and thus cause a

loss. The longer the maturity of a certain cash flow and the higher the move in the discount factor, the higher will be the

loss. Upside surprises in inflation, fiscal funding needs, and FX depreciation rates are among the most common adverse

macroeconomic shocks to receivers. But counterparty exposure, issuer creditworthiness, client segmentation, regulation

(including changes in assets holding limits for different types of investors), changes in tax policies, currency

convertibility (which may constrain currency conversion, repatriation of profits and/or the liquidation of positions), and

settlement issues related to local clearing houses are also important risk factors to be considered. The sensitivity of fixed

income instruments to macroeconomic shocks may be mitigated by indexing the contracted cash flows to inflation, to

FX depreciation, or to specified interest rates – these are common in emerging markets. It is important to note that the

index fixings may -- by construction -- lag or mis-measure the actual move in the underlying variables they are intended

to track. The choice of the proper fixing (or metric) is particularly important in swaps markets, where floating coupon

rates (i.e., coupons indexed to a typically short-dated interest rate reference index) are exchanged for fixed coupons. It is

also important to acknowledge that funding in a currency that differs from the currency in which coupons are

denominated carries FX risk. Naturally, options on swaps (swaptions) also bear the risks typical to options in addition to

the risks related to rates movements.

Derivative transactions involve numerous risks including, among others, market, counterparty default and illiquidity risk.

The appropriateness or otherwise of these products for use by investors is dependent on the investors' own

circumstances including their tax position, their regulatory environment and the nature of their other assets and

liabilities, and as such, investors should take expert legal and financial advice before entering into any transaction similar

2 September 2015


Wanda Cinema


to or inspired by the contents of this publication. The risk of loss in futures trading and options, foreign or domestic, can

be substantial. As a result of the high degree of leverage obtainable in futures and options trading, losses may be

incurred that are greater than the amount of funds initially deposited. Trading in options involves risk and is not suitable

for all investors. Prior to buying or selling an option investors must review the "Characteristics and Risks of Standardized

Options”, at http://www.optionsclearing.com/about/publications/character-risks.jsp. If you are unable to access the

website please contact your Deutsche Bank representative for a copy of this important document.

Participants in foreign exchange transactions may incur risks arising from several factors, including the following: ( i)

exchange rates can be volatile and are subject to large fluctuations; ( ii) the value of currencies may be affected by

numerous market factors, including world and national economic, political and regulatory events, events in equity and

debt markets and changes in interest rates; and (iii) currencies may be subject to devaluation or government imposed

exchange controls which could affect the value of the currency. Investors in securities such as ADRs, whose values are

affected by the currency of an underlying security, effectively assume currency risk.

Unless governing law provides otherwise, all transactions should be executed through the Deutsche Bank entity in the

investor's home jurisdiction.

United States: Approved and/or distributed by Deutsche Bank Securities Incorporated, a member of FINRA, NFA and

SIPC. Non-U.S. analysts may not be associated persons of Deutsche Bank Securities Incorporated and therefore may not

be subject to FINRA regulations concerning communications with subject company, public appearances and securities

held by the analysts.

Germany: Approved and/or distributed by Deutsche Bank AG, a joint stock corporation with limited liability incorporated

in the Federal Republic of Germany with its principal office in Frankfurt am Main. Deutsche Bank AG is authorized under

German Banking Law (competent authority: European Central Bank) and is subject to supervision by the European

Central Bank and by BaFin, Germany’s Federal Financial Supervisory Authority.

United Kingdom: Approved and/or distributed by Deutsche Bank AG acting through its London Branch at Winchester

House, 1 Great Winchester Street, London EC2N 2DB. Deutsche Bank AG in the United Kingdom is authorised by the

Prudential Regulation Authority and is subject to limited regulation by the Prudential Regulation Authority and Financial

Conduct Authority. Details about the extent of our authorisation and regulation are available on request.

Hong Kong: Distributed by Deutsche Bank AG, Hong Kong Branch.

Korea: Distributed by Deutsche Securities Korea Co.

South Africa: Deutsche Bank AG Johannesburg is incorporated in the Federal Republic of Germany (Branch Register

Number in South Africa: 1998/003298/10).

Singapore: by Deutsche Bank AG, Singapore Branch or Deutsche Securities Asia Limited, Singapore Branch (One Raffles

Quay #18-00 South Tower Singapore 048583, +65 6423 8001), which may be contacted in respect of any matters

arising from, or in connection with, this report. Where this report is issued or promulgated in Singapore to a person who

is not an accredited investor, expert investor or institutional investor (as defined in the applicable Singapore laws and

regulations), they accept legal responsibility to such person for its contents.

Japan: Approved and/or distributed by Deutsche Securities Inc.(DSI). Registration number - Registered as a financial

instruments dealer by the Head of the Kanto Local Finance Bureau (Kinsho) No. 117. Member of associations: JSDA,

Type II Financial Instruments Firms Association, The Financial Futures Association of Japan, and Japan Investment

Advisers Association. Commissions and risks involved in stock transactions - for stock transactions, we charge stock

commissions and consumption tax by multiplying the transaction amount by the commission rate agreed with each

customer. Stock transactions can lead to losses as a result of share price fluctuations and other factors. Transactions in

foreign stocks can lead to additional losses stemming from foreign exchange fluctuations. We may also charge

commissions and fees for certain categories of investment advice, products and services. Recommended investment

strategies, products and services carry the risk of losses to principal and other losses as a result of changes in market

and/or economic trends, and/or fluctuations in market value. Before deciding on the purchase of financial products

2 September 2015


Wanda Cinema


and/or services, customers should carefully read the relevant disclosures, prospectuses and other documentation.

"Moody's", "Standard & Poor's", and "Fitch" mentioned in this report are not registered credit rating agencies in Japan

unless Japan or "Nippon" is specifically designated in the name of the entity. Reports on Japanese listed companies not

written by analysts of DSI are written by Deutsche Bank Group's analysts with the coverage companies specified by DSI.

Some of the foreign securities stated on this report are not disclosed according to the Financial Instruments and

Exchange Law of Japan.

Malaysia: Deutsche Bank AG and/or its affiliate(s) may maintain positions in the securities referred to herein and may

from time to time offer those securities for purchase or may have an interest to purchase such securities. Deutsche Bank

may engage in transactions in a manner inconsistent with the views discussed herein.

Qatar: Deutsche Bank AG in the Qatar Financial Centre (registered no. 00032) is regulated by the Qatar Financial Centre

Regulatory Authority. Deutsche Bank AG - QFC Branch may only undertake the financial services activities that fall

within the scope of its existing QFCRA license. Principal place of business in the QFC: Qatar Financial Centre, Tower,

West Bay, Level 5, PO Box 14928, Doha, Qatar. This information has been distributed by Deutsche Bank AG. Related

financial products or services are only available to Business Customers, as defined by the Qatar Financial Centre

Regulatory Authority.

Russia: This information, interpretation and opinions submitted herein are not in the context of, and do not constitute,

any appraisal or evaluation activity requiring a license in the Russian Federation.

Kingdom of Saudi Arabia: Deutsche Securities Saudi Arabia LLC Company, (registered no. 07073-37) is regulated by the

Capital Market Authority. Deutsche Securities Saudi Arabia may only undertake the financial services activities that fall

within the scope of its existing CMA license. Principal place of business in Saudi Arabia: King Fahad Road, Al Olaya

District, P.O. Box 301809, Faisaliah Tower - 17th Floor, 11372 Riyadh, Saudi Arabia.

United Arab Emirates: Deutsche Bank AG in the Dubai International Financial Centre (registered no. 00045) is regulated

by the Dubai Financial Services Authority. Deutsche Bank AG - DIFC Branch may only undertake the financial services

activities that fall within the scope of its existing DFSA license. Principal place of business in the DIFC: Dubai

International Financial Centre, The Gate Village, Building 5, PO Box 504902, Dubai, U.A.E. This information has been

distributed by Deutsche Bank AG. Related financial products or services are only available to Professional Clients, as

defined by the Dubai Financial Services Authority.

Australia: Retail clients should obtain a copy of a Product Disclosure Statement (PDS) relating to any financial product

referred to in this report and consider the PDS before making any decision about whether to acquire the product. Please

refer to Australian specific research disclosures and related information at

https://australia.db.com/australia/content/research-information.html

Australia and New Zealand: This research, and any access to it, is intended only for "wholesale clients" within the

meaning of the Australian Corporations Act and New Zealand Financial Advisors Act respectively.

Additional information relative to securities, other financial products or issuers discussed in this report is available upon

request. This report may not be reproduced, distributed or published by any person for any purpose without Deutsche

Bank's prior written consent. Please cite source when quoting.

Copyright © 2015 Deutsche Bank AG

David Folkerts-Landau Group Chief Economist

Member of the Group Executive Committee

Raj Hindocha Global Chief Operating Officer

Research

Marcel Cassard Global Head

FICC Research & Global Macro Economics

Steve Pollard Global Head

Equity Research

Michael Spencer Regional Head

Asia Pacific Research

Ralf Hoffmann Regional Head

Deutsche Bank Research, Germany

Andreas Neubauer Regional Head

Equity Research, Germany

International locations

Deutsche Bank AG

Deutsche Bank Place

Level 16

Corner of Hunter & Phillip Streets

Sydney, NSW 2000

Australia

Tel: (61) 2 8258 1234

Deutsche Bank AG

Große Gallusstraße 10-14

60272 Frankfurt am Main

Germany

Tel: (49) 69 910 00

Deutsche Bank AG

Filiale Hongkong

International Commerce Centre,

1 Austin Road West,Kowloon,

Hong Kong

Tel: (852) 2203 8888

Deutsche Securities Inc.

2-11-1 Nagatacho

Sanno Park Tower

Chiyoda-ku, Tokyo 100-6171

Japan

Tel: (81) 3 5156 6770

Deutsche Bank AG London

1 Great Winchester Street

London EC2N 2EQ

United Kingdom

Tel: (44) 20 7545 8000

Deutsche Bank Securities Inc.

60 Wall Street

New York, NY 10005

United States of America

Tel: (1) 212 250 2500

Rating Company Buy Wanda Cinema -...

Documents

Transcript of Rating Company Buy Wanda Cinema -...