Huace Film&TV Alert:Huace forms agreement with Fox International Production
What’s new – Huace forms agreement with Fox International ProductionsHuace Film&TV announced a cooperation agreement with Fox InternationalProductions (FIP), a division of 20th Century Fox, which focuses on theproduction of local language films. 20th Century Fox is one of the Hollywood’s“Big Six” film studios, and has produced famous box-office hits such asTitanic, Avatar, X-Men series, and Planet of the Apes series. FIP, since itsestablishment in 2008, has generated USD900m in box office revenue.
According to the agreement, the priority will be to create Chinese languagefilms targeting Chinese audiences, and second to that will be China-U.S.co-productions.
Huace and FIP are currently working on identifying projects, and will soonannounce their first joint productions. According to Huace management, apotential strategy could be for Huace and FIP to create two versionstargeting Chinese and U.S. audiences based on one script.DB’s view – a TV guru aggressively expanding its film businessn。
We believe the deal with FIP could further strengthen Huace’s ability todevelop well-known IP. Learning from Fox’s film production anddistribution expertise, Huace would be able to enhance its film quality, andto grow its film business with an international focus.
As we mentioned in our recent initiation report (Huace Film&TV, TV dramaguru – initiating with Buy), Huace has been expanding into film productionover the past two years. The company has established cooperation withseveral international companies including Arclight Films and Korean NextEntertainment World, and has signed agreement with Batman producer Mr.Michael Uslan.
Supported by the cooperation with FIP and other international partners, weexpect Huace to achieve strong growth of 55% revenue CARG in its filmbusiness over the next two years.
We believe Huace’s leading position in TV drama production will continueto provide it with sustainable cash flow and solid earnings, while theexpanding film business should stimulate strong growth in the near- tomedium-term.
We reiterate our Buy recommendation on Huace Film&TV with a pricetarget of RMB38.