Pantaflix — Content catch-up

Pantaflix (DB: PAL)

Last close As at 21/12/2024

1.35

0.03 (1.89%)

Market capitalisation

25m

More on this equity

Research: TMT

Pantaflix — Content catch-up

Pantaflix has had a busy first half, with productions delayed from FY20 coming to completion and with more expected to complete in H221. H121 revenue of €22.7m will be the bulk of the year’s total, with management guiding to a figure of more than €30m. EBIT for the year will be in a range of -€2.5m and break-even, having narrowed to a €2.1m loss in H121 (H120: -€4.3m). The industry fundamentals remain positive across the group’s operations, particularly in terms of high levels of demand for content from the major streaming platforms. The group’s offering in the B2B2C sector is also gaining traction, with a strong portfolio of partners. Half year cash of €6.5m (production finance debt only) was boosted by a €2.0m gross fund-raise, which puts the group in a sound financial position.

Fiona Orford-Williams

Written by

Fiona Orford-Williams

Director, TMT

TMT

Pantaflix

Content catch-up

Media & technology

Scale research report - Update

20 October 2021

Price

€1.24

Market cap

€23m

Share price graph

Share details

Code

PAL

Listing

Deutsche Börse Scale

Shares in issue

18.6m

Last reported cash at end H121

€6.5m

Business description

Pantaflix is a European media group. It consists of the VoD platform Pantaflix, the film production division Pantaleon Films, the production unit Pantaflix Studios, the audio unit PantaSounds and the creative agency Creative Cosmos 15.

Bull

Significant VoD demand and opportunities.

Increasing B2B offering.

Internationalisation of platform.

Bear

Large productions mean large working capital swings.

Limited liquidity.

Project risk on film/series production.

Analyst

Fiona Orford-Williams

+44 (0)20 3077 5739

Pantaflix has had a busy first half, with productions delayed from FY20 coming to completion and with more expected to complete in H221. H121 revenue of €22.7m will be the bulk of the year’s total, with management guiding to a figure of more than €30m. EBIT for the year will be in a range of -€2.5m and break-even, having narrowed to a €2.1m loss in H121 (H120: -€4.3m). The industry fundamentals remain positive across the group’s operations, particularly in terms of high levels of demand for content from the major streaming platforms. The group’s offering in the B2B2C sector is also gaining traction, with a strong portfolio of partners. Half year cash of €6.5m (production finance debt only) was boosted by a €2.0m gross fund-raise, which puts the group in a sound financial position.

Busy in film and streaming content

Pantaflix has some notable projects set for H221. It has finished filming Army of Thieves, the prequel to Netflix’s very successful Army of the Dead, available from the end of October 2021. Generation Beziehungsunfähig, filmed in FY20, was released in July 2021 and two more movies, Wolke unterm Dach and Oskars Kleid are now in post-production, to complete in H221. Pantaflix Studios has finished filming the third series of Das Internat for streaming service Joyn (airing from October). Sex Zimmer, Küche, Bad, for Amazon Prime, is also in post-production.

Positioning for growth

The management board was strengthened in August with the appointment of a COO from within the business, Stephanie Schettler-Köhler, who now oversees Pantaleon Films, finance, HR and legal. Nicolas Paalzow remains CEO of the group. Pantaflix’s streaming platform is gaining traction with its ‘entertainment-as-a-service’ concept for organisations that want to offer their customers video content but lack the infrastructure. The group is strengthening its proposition with the film festival and cinema sectors, offering services beyond additional digital screenings, such as curation and editing. There is good potential for international expansion here, and for building the group’s recurring revenues and operating margin. The audio operation, PantaSounds (now wholly owned), is also targeted for expansion.

Valuation: Below peers

There are no broker forecasts, and FY20 and FY21 financials have been severely disrupted by the pandemic impact. Pantaflix trades on a FY20 EV/sales of 3.0x, compared with peers on 2.8x. For FY21, this falls to 0.8x, with peers at 1.8x. The €17m EV implies a very low valuation for its production arm, in a market where streamers remain hungry for quality, local content as they compete for viewers.

Adjusted consensus estimates

Year
end

Revenue
(€m)

PBT
(€m)

GAAP EPS
(€)

DPS
(€)

P/E
(x)

EV/EBIT
(x)

12/19

28.7

(8.6)

(0.52)

0.0

N/A

N/A

12/20

7.8

(7.1)

(0.42)

0.0

N/A

N/A

12/21e

30.0+

N/A

N/A

N/A

N/A

N/A

Source: Pantaflix

Edison Investment Research provides qualitative research coverage on companies in the Deutsche Börse Scale segment in accordance with section 36 subsection 3 of the General Terms and Conditions of Deutsche Börse AG for the Regulated Unofficial Market (Freiverkehr) on Frankfurter Wertpapierbörse (as of 1 March 2017). Two to three research reports will be produced per year. Research reports do not contain Edison analyst financial forecasts.

Review of H121 results

The group does not disclose the split of its revenues between production and distribution elements, nor does it separately identify revenues from its creative agency (56% owned) or music business (57.5% owned in FY20, now 100% owned). These latter two activities only accounted for 4% of group FY19 revenues but are likely to have contributed a greater proportion in FY20, given the restrictions in film and episodic TV/streaming series production (for both Pantaleon Films and Pantaflix Studios) over successive lockdowns. For H121, the percentage from these activities is likely to have dipped as production activity stepped back up. Generally, revenues falling into any period can swing by substantial amounts as film and episodic projects move towards completion and distribution.

Exhibit 1: Summary of results

€m

H119

H120

H121

H121 % change y-o-y

INCOME STATEMENT

Revenue

14.5

4.9

22.7

+364

Increase (decrease) in finished goods and work in progress

(8.3)

(1.2)

(13.0)

+971

Other own work capitalised

0.2

0.5

0.0

N/A

Other operating income

0.9

0.2

1.1

+334

Gross revenues

7.3

4.4

10.8

+146

Cost of purchased services

(3.6)

(3.0)

(3.7)

+24

Gross profit

3.7

1.4

7.1

+408

Opex

(4.8)

(4.7)

(3.3)

+42

EBITDA (loss)/profit

(1.1)

(3.3)

3.7

N/A

D&A

(5.2)

(1.0)

(5.9)

+485

EBIT (loss)

(6.3)

(4.3)

(2.1)

N/A

Profit Before Tax (as reported)

(6.3)

(4.3)

(2.1)

N/A

Net income (as reported)

(6.3)

(4.3)

(2.1)

N/A

EPS (as reported) (€)

(0.41)

(0.27)

(0.13)

N/A

BALANCE SHEET

End FY19

End H120

End H121

Total non-current assets

6.0

10.8

17.6

+63

Total current assets

14.6

8.5

11.2

-24

Total assets

21.1

19.5

28.7

-32

Total current liabilities

(9.0)

(11.7)

(21.6)

-46

Total non-current liabilities

0.0

0.0

0.0

N/A

Total liabilities

(9.0)

(11.7)

(21.6)

-46

Total Equity

12.1

7.8

6.6

+18

Source: Company accounts, Edison Investment Research

The percentage changes in the income statement between H120 and H121 are obviously greatly distorted by the heavy impact of the pandemic in the prior year. In the exhibit above, we have also included H119 for reference. As described in the H121 earnings release statement, there were a number of larger film and episodic productions ongoing and due for completion in H221, with revenue generation and operating costs not necessarily fully aligned. Substantial projects completed in H121, delayed from the prior year, leading to a larger reduction in finished goods and work in progress at €13.0m (H120: €1.2), with gross revenues up 146% at €10.8m. With modest growth in cost of materials (including co-producers’ shares of licensing income), the group delivered an EBITDA profit of €3.7m. Higher D&A from completed projects translated this into a loss at the EBIT level of €2.1m.

No cash flow statement is provided by the company at the interim stage. The balance sheet also swings widely as finished films and projects move in and out of work-in-progress. During the reporting period, the group sold a 49% stake in its Munich-based Studios (purchaser and transaction price undisclosed) and bought in the minority of its audio operation PantaSounds (price undisclosed).

The half-year cash and cash equivalents position was €6.5m. This is down from €7.2m at the end of the previous financial year despite including the proceeds of the May 2021 share placing (a 10% increase in the number of shares), which raised €2.0m gross. The bank debt of €8.2m on the face of the balance sheet relates specifically to project financing, rather than any indebtedness for Pantaflix itself.

Operating update

All areas busy

The largest film and episodic projects of the period are highlighted above (Army of Thieves, Das Internat and Generation Beziehungsunfähig being the most significant). Oskars Kleid and Wolke unterm Dach will have more significant impact in H221.

The exploitation of the Pantaflix streaming platform is still at a relatively early stage, but it clearly has good potential to deliver significant and higher-quality earnings (being less exposed to projects which may or may not succeed at the box office/ streaming views), with a greater proportion of recurring revenues. The pandemic and consequent lockdowns have highlighted the opportunity for cinemas to build their audience base (which, away from the main commercial brands, is typically loyal and engaged) beyond those in the physical vicinity of the buildings. We regard this area as the key to building out value within the group.

Pantaflix’s creative agency, CC15, has been growing its client base, adding food service delivery company Flink to the roster. It also delivered notable campaigns including around the Paralympics.

Management has recognised the increased levels of interest around audio content, which has been something of a poor relation historically. As indicated above, it has bought in the minority of PantaSounds with the intention of driving the business more actively, with audio books and podcasts.

Forecasts and valuation

There are no longer any broker estimates in the market, so the current year estimates shown here are based on management revenue guidance. This indicates full year revenues of over €30m. The guided level of EBIT is between -€2.5m and break-even, so calculating a multiple on this basis is not practicable.

Exhibit 2: Peer multiples

Name

Ytd perf (%)

Market cap (m)

Sales growth 1FY (%)

Sales growth 2FY (%)

EV/Sales 0FY (x)

EV/Sales 1FY (x)

EV/Sales 2FY (x)

EV/EBIT 0FY (x)

EV/EBIT 1FY (x)

P/E 0FY (x)

P/E 1FY (x)

Pantaflix (€)

7

22

332

9

3.0

0.8

-

(3.3)

N/A

(2.8)

N/A

Eros Stx ($)

(56)

302

135

-

4.0

1.7

-

(8.7)

(11.1)

8.9

(5.0)

Lions Gate Ent. ($)

28

3,067

19

15

2.0

1.7

1.4

50.5

53.9

(50.1)

(54.3)

Mondo TV (€)

1

59

16

10

2.5

2.2

2.0

7.7

5.9

11.2

9.6

Prosiebensat.1 Media (€)

15

3,688

11

5

1.5

1.4

1.3

11.8

0.4

16.2

11.1

Notorious Pictures (€)

18

40

123

110

4.0

1.8

0.9

-

10.7

-

9.1

Average

1

61

35

2.8

1.8

1.4

15.3

12.0

(3.5)

(5.9)

Source: Refinitiv, Edison Investment Research. Note: Priced as at 15 October 2021. Average excludes Pantaflix.

The share price has now recovered to levels earlier in the summer. Without longer-term insight into revenue and earnings potential through market forecasts, forming a considered view on valuation is difficult, particularly since historical revenues have been so affected by the restrictions stemming from the pandemic. In any event, with many projects lasting more than one year, revenue falling into a specific reporting period is not necessarily indicative of the amount of work flowing through the business. Across FY20 and FY21, Pantaflix’s EV/Sales averages 1.9x, while that for peers averages 2.3x. Given the market forces underpinning demand for content, we see no reason for revenues to drop off in FY22. If they were just to be flat in that year, the average across the three years, Pantaflix would be trading on 1.5x EV/Sales versus peers at 2.0x.

Assets are not an appropriate valuation metric given the nature of the industry.

BlackMars Capital, the management team (including Austrian entrepreneur, Klemens Hallmann, who was elected to the supervisory board in July 2019) and the founding shareholders (Marco Beckmann, Dan Maag and Matthias Schweighöfer) together own around 70% of the shares. The free float stands at 30%.


General disclaimer and copyright

Any Information, data, analysis and opinions contained in this report do not constitute investment advice by Deutsche Börse AG or the Frankfurter Wertpapierbörse. Any investment decision should be solely based on a securities offering document or another document containing all information required to make such an investment decision, including risk factors. This report has been commissioned by Deutsche Börse AG and prepared and issued by Edison for publication globally.

Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2021 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

This paragraph mark is needed to maintain formatting, please leave this text for the editors.

More on Pantaflix

View All

Latest from the TMT sector

View All TMT content

Research: Healthcare

Pixium Vision — Three-year data confirms continued Prima safety

Pixium reported 36-month data from its European feasibility study (PRIMA-FS) on the Prima implant in patients with geographic atrophy (GA) associated with advanced dry age-related macular degeneration (Dry-AMD). The implant remained safe and well tolerated and, importantly, there was no indication of device or performance degradation, and patients continued to be capable of integrating their natural vision with the artificial vision provided by the device. We remain encouraged that there is no degradation in Prima’s prosthetic visual performance, given some external speculation that advanced Dry-AMD could eventually provoke atrophic damage to the retinal ganglion cells (on which the Prima system relies for providing the patient’s prosthetic vision).

Continue Reading

Subscribe to Edison

Get access to the very latest content matched to your personal investment style.

Sign up for free