Piper Jaffray Comments On Bona Film Group Following Earnings Report

Bona Film Group BONA reported 4Q results and 2011 guidance mostly in-line with Piper's estimates and consensus. Revenue of $17.8M was below its estimate of $22.9M but in-line with consensus of $17.9M while non-GAAP net income of $3.4M compared to Piper's estimate of $3.6M and consensus of $2.5M. Gross margin of 48.4% improved YoY from 47.5%. Looking forward, while 1Q11 net income guidance of $1.8-$2.2M was significantly below Piper Jaffray's estimate of $5.2M and consensus of $5.1M driven largely by the delay of The Grand Master, full year 2011 non-GAAP net income guidance of approximately $20.0M was ahead of Piper's estimate of $19.3M and in-line with consensus of $20.2M. Piper Jaffray continues to believe BONA is well positioned to benefit from a growing filmed entertainment market in China. Increased investment in the sector will likely drive more film production and theatre construction which should in turn attract Chinese consumers with an appetite and disposable income for entertainment. Valuation for the BONA shares appears attractive relative to growth prospects and potential risks. Piper Jaffray has a $10 PT and Overweight rating on BONA BONA closed Tuesday at $7.44