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Tuesday, August 10, 2010

Prime Focus Ltd:-Paid call to members(target acheived)

Many of you repeatedly in my mail have asked for paid calls and what they will be and all.Now as an amateur and being a social guy I would always safeguard the vested interest of investors than something else.The open blog is a place for me to give guidance..paid blog is for the one who needs those calls and my bigtime guidance desperately.Anyways here"s an example of a paid member call and the type which I provided just 3 months back.

Market outlook and stock tip:-Prime focus
Saturday, May 15, 2010

Scripscan:Prime Focus Ltd
Traded in:Nse-bse
Target:550(revised from 460)
percentage returns:104%
Duration:4-7 months

Story:Why I feel Prime focus is one of the best bets in the present market:-

1)Outsourcing of entertainment technology (ET) services is a huge opportunity for low-cost countries like India. As a global ET player, Prime Focus (PFL) is poised to profitably scale up its business with low risks. PFL offers the full range of ET services in India, and has built strong relationships with both customers and vendors.

2)PFL's business model is robust. It is fairly predictable, scalable, highly profitable and sufficiently derisked. Aggressive depreciation keeps profit muted; but margins are high enough to keep operating cash flow strongly positive and rising.

3)PFL has an estimated 60% market share in India. With six facilities across Mumbai, Hyderabad and Chennai, its domestic business continues to grow at a fast pace, as the use of visual and special effects in Indian films is on the rise. The business is highly profitable with operating margins at 50-60%

4)PFL has built an international presence with facilities spanning the UK, US and Canada. Its first acquisition in the UK (VTR) has paid off, with Prime Focus successfully turning around the company and the facility has begun to outsource work to India.

5)Prime Focus acquired Frantic Films and Post Logic Studios for $43 million in late 2007, which gave it access to facilities and talent pools in key markets of Los Angeles, New York, Vancouver and Winnipeg. The targets have combined revenue of $25 million (Rs 107 crore) and have been associated with films such as Spiderman 3, Fantastic Four and Superman Returns.

6)International acquisitions offer PFL the opportunity to work on more sophisticated projects, gain exposure to the latest technology and allow them to capitalise on the outsourcing opportunity in India. From a financial perspective, the very size of the companies proposed to be acquired may substantially boosts revenues.

7) Prime Focus's tie up with Warner Bros' Motion Picture Imaging appears to be recognition of the merits of this international operation. The benefits of the strategy are likely to pay off from FY '10.

8)With a strong presence in the niche area of post-production services for films, a unique cross-border business model and a good pipeline of film projects, Prime Focus(PFL) is a preferred pick within the media sector.

Conclusion:THis is the same scrip which went to 1450 during the bull market of 2007-08.Counter is already at a huge 80% discount to its all time high.Its quoting at low single digit PE multiple its one year forward earnings which is very low considering the kind of potential is having. The upside triggers to the stock can come from: a) outsourcing opportunity from the US and Canada and b) growth in VTR revenue.An investment can be considered in the stock with a 12-18 month perspective.Medium term memmbers can act accordingly as per my target and duration.

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