Stockchase Opinions

Ryan Modesto D-Box Technologies DBO-T DON'T BUY Mar 01, 2018

Motion seating for theaters. They are getting into a bit of a problem. Markets are going to stop caring about them. The bottom line is doing nothing.

$0.260

Stock price when the opinion was issued

Consumer Products
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BUY

While blockbuster movies, like Black Panther, are helping theaters now, box offices are facing significant challenges. Reflecting the challenge, theaters are replacing their current seats with recliner style seats, which is what D-Box offers. Their seats also provide shake-and-quake with the movie. They are now sharing in theater revenue, and Cineplex is continuing to reorder these seats for additional locations. As adoption increases, there is more recurring revenue. The company is not yet profitable. There is an expected loss in 2018, breakeven in 2019, and earn 3 cents per share in 2020. This looks like a reasonable investment over the next three years.

BUY

Seats for movie theatres. They also make them for simulation in other industrial applications. They have been releasing better and better results and no analyst has caught on to it. They have huge customers in Canada. It is only a matter of time when these seats catch on in Canada.

BUY

He is not sure why the stock is doing so poorly except that money is being sucked out for other sectors. A lot of these companies have never been better valued. They had a great quarter last quarter. They announced a lot of new systems post-quarter. They are reinvesting in sales and marketing. The sales have never been better. He is holding on. It needs a large announcement with a large US chain.

HOLD
They are involved in cinemas with seats that move as well as simulations with the military. The stock has never been lower and the results have never been better. He hopes this year there will be some catalyst to get the share price moving. There is a lot of value to this company that has not been reflected. He thinks the board should look at strategic alternatives.
COMMENT
They had a decade of good revenue growth and profitability but in the last year things have slowed and he is very disappointed. They have an installed base that generates recurring revenues. He has approached the board to ask for a strategic review. He hopes some shareholder value will be unlocked. It has excellent technology and an excellent client base. There is good IP technology that has to be unlocked.
WATCH
It is getting pounded by tax loss selling. They have very valuable IP and a good installed base. It is worth more than it is trading for and he is urging the board to unlock some of that value.
WATCH
Cinema closings? COVID-19 has put this investment thesis on hold. It does not kill it, but there are other opportunities out there. Their theater technology is a wonder, but it would not interest him now. You need to know when movie theaters will be allowed to open up again.
DON'T BUY
They produce motion systems used in movie theatres, but also for industrial applications, like simulations in aeronautics, video games and VR. However, their big market was movies and we all know what happened to movie theatres during the pandemic. DBO's big market has dried up and probably for many years; he doesn't see theatre chains spending on capex. Stay on the sidelines.
WAIT
A disappointment. Pandemic has been the nail in the coffin for movie theatres and DBO's motion systems. Simulation and industrial segments have been profitable. Treading water right now. Long road ahead. Wait and see before stepping in.