Kiosk Continues to Drive FAB Universal

Zacks Small Cap Research

By Ken Nagy, CFA

On September 10, 2013, FAB Universal (NYSE MKT:FU), the distributor of digital entertainment, reported it signed a new kiosk advertising agreement with China Xiangyu Cultural Development Co., Ltd. 

The agreement will contribute to the revenue generated from FAB’s rapidly growing 5C Intelligent Media Kiosk Network with China Xiangyu Cultural Development Co., Ltd. providing advertising on the top screen of the FAB Kiosk Network.

China Xiangyu Cultural Development Co., Ltd. is a marketing and entertainment company focused on organizing cultural performances, providing advertising services, and operational as well as marketing activities for online games, animation and 3G.

The five year advertising agreement is expected to significantly increase FAB’s 5C Kiosk advertising revenue
by bringing in at least $2.5 million in revenues annually.

It’s important to note that as the company continues to expand its Kiosk network, the opportunity to advertise on its kiosks will become more attractive and therefore drive advertising revenue, which is an important component of FAB’s growth strategy.

FAB kiosks, located in high-traffic areas of office buildings, shopping malls, retail stores and airports, are self-service terminals that provide a range of entertainment and consumer applications.

FAB generates revenue from its Intelligent Media Kiosk Business through the sale of licenses, ongoing media content downloads, media membership cards and kiosk-based advertising. Consumers can purchase and download copyrighted music, video games and movies directly to their cell phones or other mobile devices. FAB Media Kiosks can also run video ads on their high-tech LCD screens and accept payments for utility bills, metro cards, credit card bills, and other services.

The recent jump in FAB’s year over year second quarter revenues was led by continued gains from FAB’s fast-growing, high-margin digital segment, which includes its Intelligent Media Kiosk business.

What’s more, there is ample room to expand its network of Intelligent Kiosk by adding new locations in the cities in which FAB already operates and establishing a presence in the other 120 cities in China with a population of over 1 million people.

As a result, management intends to continue to aggressively build out its network during the second half of the year.

FAB has a strong foothold in the explosive growth of the entertainment industry in China, which is being propelled by the increasing spending power of a rising middle class and the government stated plans for the industry to become a major economic growth engine over the next few years.

With its strong brand recognition and distribution base, FAB is perfectly situated to capitalize on the industry’s rapid growth, by expanding its distribution network, driving more content through the network, and extending its market leadership and brand strength, all the while positioning the company to take advantage of the increasing rate of internet penetration and expanding internet infrastructure in China.

A copy of the full research report can be downloaded here >> 
 FAB Universal Report

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SCR.Zacks.com for additional information on our research and coverage universs expected to significantly increase FAB’s 5C Kiosk advertising revenue
by bringing in at least $2.5 million in revenues annually.

It’s important to note that as the company continues to expand its Kiosk network, the opportunity to advertise on its kiosks will become more attractive and therefore drive advertising revenue, which is an important component of FAB’s growth strategy.

FAB kiosks, located in high-traffic areas of office buildings, shopping malls, retail stores and airports, are self-service terminals that provide a range of entertainment and consumer applications.

FAB generates revenue from its Intelligent Media Kiosk Business through the sale of licenses, ongoing media content downloads, media membership cards and kiosk-based advertising. Consumers can purchase and download copyrighted music, video games and movies directly to their cell phones or other mobile devices. FAB Media Kiosks can also run video ads on their high-tech LCD screens and accept payments for utility bills, metro cards, credit card bills, and other services.

The recent jump in FAB’s year over year second quarter revenues was led by continued gains from FAB’s fast-growing, high-margin digital segment, which includes its Intelligent Media Kiosk business.

What’s more, there is ample room to expand its network of Intelligent Kiosk by adding new locations in the cities in which FAB already operates and establishing a presence in the other 120 cities in China with a population of over 1 million people.

As a result, management intends to continue to aggressively build out its network during the second half of the year.

FAB has a strong foothold in the explosive growth of the entertainment industry in China, which is being propelled by the increasing spending power of a rising middle class and the government stated plans for the industry to become a major economic growth engine over the next few years.

With its strong brand recognition and distribution base, FAB is perfectly situated to capitalize on the industry’s rapid growth, by expanding its distribution network, driving more content through the network, and extending its market leadership and brand strength, all the while positioning the company to take advantage of the increasing rate of internet penetration and expanding internet infrastructure in China.

A copy of the full research report can be downloaded here >> 
 FAB Universal Report

Please visit 
SCR.Zacks.com for additional information on our research and coverage universe, and Subscribe to receive our articles and reports emailed directly to you each morning.

 

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