D-BOX Technologies has the potential for "aggressive upside" says Echelon Wealth

Recent progress in China has Echelon Wealth Partners analyst Rob Goff feeling optimistic about D-Box Technologies’ (D-Box Technologies Stock Quote, Chart, News: TSX:DBO) future.

In a research update to clients today, Goff maintained his “Speculative Buy” rating and one-year price target of $0.95 on D-BOX, implying a retun of 46.2 per cent at the time of publication. But the analyst hinted that he may soon revisit this target.

“D-BOX has now successfully executed on two further steps supporting its disciplined strategic plan that we believe will lead the company to become a significant factor in the Chinese theatre marketplace,” says the analyst. “Through the process, we see the potential for aggressive upside beyond our baseline forecasts and conservative PT of $0.95. Our target DCF at $0.99 reflects baseline forecasts, and discounts the potential upside associated with greater screen penetration in Asia and South America, prospective VR driven opportunities, and the potential for aggressive growth in home theatre applications. Continued strong execution, large contract announcements and/or strategic partnerships could support a positive revaluation.”

On Tuesday, D-BOX announced it will install a full-size auditorium with D-Box high-fidelity motion systems in the Chinese province of Hainan. The theatre, which will seat 143, is a partnership with China’s Shanghai Bestar Cinemas Management and will be branded as the Bestar D-Box Cinema.

“To provide one complete auditorium equipped with our immersive motion seating technology is a great moment for us but, more importantly, for moviegoers, who will now be part of an experience in which everyone in the room will be on the same wavelength,” said CEO Claude McMaster. “From a business perspective, this contract underlines just how scalable our technology is, and demonstrates how we can accommodate all types of auditorium and space considerations. This is another step to provide top-tier premium entertainment in a very fast-growing market.”

Yesterday, D-BOX announced it would open a motion-coding studio in Beijing with State Production Base of China Film Co. Ltd., something the company said would help it play a bigger role in the Chinese market.

Goff thinsk D-BOX will generate Adjusted EBITDA of $1.5-million on revenue of $33.8-million in fiscal 2017, numbers he expects will climb to EBITDA of $5.6-million on revenuue of $37.4-million the following year.