Mainframe Entertainment (ReBoot/Beasties) Message Board

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Gold/Mining/Energy : Mainframe Entertainment (ReBoot/Beasties)

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To: Sleeperz who wrote (173)	10/3/1997 1:58:00 PM
From: D.E. Shetland	of 459

Small volume trying to push its way into a tightly held situation. The old supply/demand curves work - Result = price up. Yeah, I'm guessing folks are finally "discovering" our little gem and desperately trying to get in before they reach a final deal on a few more shows or a movie or something. The company has publicly stated they have been working with Warner/Storyopolis for a while and thought they'd get somewhere on the project before year-end. If one's a believer on this, the valuation over the next year is compelling. To wit: Mainframe: Market Cap US$135mil Rev 98 Est US$ 67mil (includes only $30mil for a movie) EBITDA US$ 20mil Net Income US$ 10mil If Cinar's at 44x next year with earnings growth of 21% and a market cap of US$450mil, Nelvana at 20x growing 25% and mkt cap of US$110 and Pixar at >70x (they'll actually lose money next year b/c no project) for no earnings growth and a mkt cap over US$1bil, then my target for MFE with only one smallish movie would be 25x the net income = US$250mkt cap (=C$24/share). Of course, they could add a few more shows etc. Also, this income estimate is "normalized" in the sense that they would only book any movie work when completed and this assumes a $30mil movie would be completed by Mar99. They can probably crank something out if they land one soon --that gives them 18 months. They will have done 900+ minutes by year end and a movie, while higher resolution, would only be 80-90 minutes. So valuations can easily justify a $250mkt cap and still leave upside for more shows or movies. On some basic assumptions, the upside is still huge. That must be why folks are desperately trying to get in now. Good luck. Now that it's been found, on any big interest or news, were off to the races.

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