Portfolio Manager/Head of Equity Investment, Tandem Investors Limited

Jason Oh

Portfolio Manager/Head of Equity Investment

Tandem Investors Limited

Equity Bottom-Up

Increase the weight in Asia Pacific model portfolio from 2.7% to 4.3% We increased the weight of <a href="https://www.smartkarma.com/entities/2885" target="_blank" data-smartkarma-citation="entities:2885:1">Cj Cgv Co Ltd (079160 KS)</a> in our Asia Pacific long-short model portfolio from 2.7% to 4.3% due to the followings; 1) The company's market share in China is on the rise backed by the successful penetration into 2nd and 3rd cities, while the nationwide B/O (box office) numbers are shrinking, 2) The Turkish business, acquired in Apr 2016, is likely to turnaround, given the high M/S over 40% and strong seasonality  of Turkish market, 3) Our quantitative technical score, TTS(Tandem Technical Score: more information below) is 1.09, implying that the share price is likely to rebound before long.Gaining M/S while China's negative growth is meaningful achievement The company's market share in China B/O is growing to 2.9% (ranked 7th) in 3Q16, which has been growing from below 1% and 20th since 2006. Particularly, the company's direct affiliates mainly in 2nd-3rd tier cities in China are turning black from last year's c. USD10mn deficit. Businesses in 1st tier cities are by JV with local companies and already making money due to prime location. Given the sluggish launching of the blockbuster premieres in 2016, we believe the company will show the meaningful earnings growth in 2017 in China business.Disappointing 3Q16 results were due to one-off cost from Turkey business and already priced-in The company announced the acquisition of No.1 multiplex company (M/S of 42%), Mars Entertainment Group, in Apr 2016. However, the company made a big loss over KRW 13bn in 3Q16 from the acquisition such as financial cost and one-off cost related to the acquisition. After the announce of the acquisition, the share price continues to slide down by c.50% for the past 6 months. We believe now the negatives are fully priced-in and Turkey business will show a strong earnings rebound in 4Q16, due to seasonal effect, high M/S in the market, and lowered interest rate resulting from the refinancing of the debts.

Increase the weight in Asia Pacific model portfolio from 2.7% to 4.3% We increased the weight of Cj Cgv Co Ltd (079160 KS) in our Asia Pacific long-short model portfolio from 2.7% to 4.3% due to the followings; 1) The company's market share in China is on the rise backed by the successful penetration into 2nd and 3rd cities, while the nationwide B/O (box office) numbers are shrinking, 2) The Turkish business, acquired in Apr 2016, is likely to turnaround, given the high M/S over 40% and strong seasonality  of Turkish market, 3) Our quantitative technical score, TTS(Tandem Technical Score: more information below) is 1.09, implying that the share price is likely to rebound before long.Gaining M/S while China's negative growth is meaningful achievement The company's market share in China B/O is growing to 2.9% (ranked 7th) in 3Q16, which has been growing from below 1% and 20th since 2006. Particularly, the company's direct affiliates mainly in 2nd-3rd tier cities in China are turning black from last year's c. USD10mn deficit. Businesses in 1st tier cities are by JV with local companies and already making money due to prime location. Given the sluggish launching of the blockbuster premieres in 2016, we believe the company will show the meaningful earnings growth in 2017 in China business.Disappointing 3Q16 results were due to one-off cost from Turkey business and already priced-in The company announced the acquisition of No.1 multiplex company (M/S of 42%), Mars Entertainment Group, in Apr 2016. However, the company made a big loss over KRW 13bn in 3Q16 from the acquisition such as financial cost and one-off cost related to the acquisition. After the announce of the acquisition, the share price continues to slide down by c.50% for the past 6 months. We believe now the negatives are fully priced-in and Turkey business will show a strong earnings rebound in 4Q16, due to seasonal effect, high M/S in the market, and lowered interest rate resulting from the refinancing of the debts. 

CJ CGV: Preparing for Blooming During Snowy Winter

Public Relations and Social Media Manager, Dechert LLP

Peggy Heffner

Public Relations and Social Media Manager

Dechert is a global specialist law firm

Dechert LLP

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Event-Driven

Fast Facts<ul><li>In the first three quarters of 2016, there were 24 significant merger investigations, which is on pace to challenge the record of 37 set in CY2015. </li><li>Significant merger investigations through Q3 2016 lasted 9.7 months on average—on par with CY2015, but more than one-third longer than from 2011 to 2013. </li><li>The antitrust agencies filed three complaints in the third quarter for a total of five complaints YTD, also on pace to challenge the record level of CY2015 when seven complaints were filed.</li><li>Scheduling orders related to the complaints filed in 2016 indicate that antitrust merger litigation is taking even longer with 147 days between complaint and the start of trial and 27 days for trial, up 47% and 125%, respectively, from cases filed in CY2015.</li></ul>

 Fast FactsIn the first three quarters of 2016, there were 24 significant merger investigations, which is on pace to challenge the record of 37 set in CY2015. Significant merger investigations through Q3 2016 lasted 9.7 months on average—on par with CY2015, but more than one-third longer than from 2011 to 2013. The antitrust agencies filed three complaints in the third quarter for a total of five complaints YTD, also on pace to challenge the record level of CY2015 when seven complaints were filed.Scheduling orders related to the complaints filed in 2016 indicate that antitrust merger litigation is taking even longer with 147 days between complaint and the start of trial and 27 days for trial, up 47% and 125%, respectively, from cases filed in CY2015.

No Let Up in Antitrust Merger Investigation or the Duration of Merger Investigations

United States

Carmike Cinemas, Inc. owns and operates movie theaters in multiple states. The Company's focus is on small to mid-sized communities with populations of fewer than 100,000 people.

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Carmike Cinemas (CKEC US)

CJ CGV: Preparing for Blooming During Snowy Winter

Increase the weight in Asia Pacific model portfolio from 2.7% to 4.3% We increased the weight of Cj Cgv Co Ltd (079160 KS) in our Asia Pacific...

Jason Oh

No Let Up in Antitrust Merger Investigation or the Duration of Merger Investigations

Fast Facts In the first three quarters of 2016, there were 24 significant merger investigations, which is on pace to challenge the record of 37...

Dechert LLP

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