Digital Domain Holdings (0547) AI Stock Analysis

• Market Cap: HK$3.07B
• Dividend Yield: N/A
• Average Volume (3M): 2.07M
• Price to Earnings (P/E): ―
• Beta (1Y): 0.02
• Revenue Growth: 32.49%
• EPS Growth: 13.58%
• Country: HK
• Employees: 896
• Sector: Communication Services
• Sector Strength: 97
• Industry: Entertainment
• EPS (TTM): -0.01
• Shares Outstanding: 7,979,248,500
• 10 Day Avg. Volume: 1,073,030
• 30 Day Avg. Volume: 2,073,267
• PEG Ratio: 0.32
• Price to Book (P/B): 7.91
• Price to Sales (P/S): 6.36
• P/FCF Ratio: -14.15
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 43 Neutral
• Price Target: HK$0.38 ▲(7.43% Upside)

Overall score is held down primarily by weak financial performance—declining revenue, persistent losses, and negative operating/free cash flow. Technicals provide some offset via positive momentum, but the overbought RSI raises near-term risk. Valuation is not supportive given losses (negative P/E) and no dividend yield data.

Positive Factors

Revenue Growth

Despite financial challenges, the company has shown a significant revenue growth rate, indicating potential for market expansion and increased demand for its services.

Industry Position

As a leader in digital media and entertainment, Digital Domain Holdings benefits from a strong market position, enhancing its ability to attract major clients and projects.

Diversified Revenue Streams

The company's diversified revenue streams across various sectors and technologies provide resilience against market fluctuations and opportunities for growth in emerging areas like VR and AR.

Negative Factors

Financial Instability

Ongoing financial instability with persistent losses and declining revenues threatens the company's ability to sustain operations and invest in growth opportunities.

Negative Cash Flows

Negative cash flows highlight significant challenges in cash generation, limiting the company's ability to fund operations and strategic initiatives without external financing.

Operational Inefficiencies

Negative EBIT and EBITDA margins indicate operational inefficiencies, which could hinder profitability and require strategic adjustments to improve cost management and operational execution.

Digital Domain Holdings Business Overview & Revenue Model

Company Description

Digital Domain Holdings Limited, an investment holding company, engages in the media entertainment business in Hong Kong, the People's Republic of China, the United States, Canada, the United Kingdom, rest of Europe, and internationally. The company offers augmented reality (AR), immersive reality, and virtual reality (VR) technology services using 360 degree digital capture technology and computer graphics (CG); and researches, develops, and sells VR hardware, smart wearable devices, VR software development kits, and other related products under the 3Glasses brand. It also provides visual effects (VFX) production and post-production services, such as visualization, previsualization, post-visualization, CG, animation, motion capture, virtual production, real-time game engine production, live action filming, editing, design, and finishing for major motion picture studios, networks, streaming services, advertisers, brands, and games. In addition, the company offers VFX production and post-production services for commercials, TV drama series, and feature films comprising offline and online editing, compositing, color grading, design, music and audio, and CG and VFX production, as well as production services for the making of commercials, VR/360 degree videos, and feature films. Further, it researches and develops virtual human technology; co-produces feature films and episodes series; provides management, consultancy, trading, and securities investment services, as well as virtual reality content services; researches and develops software; and manages intellectual property licenses and trademarks. The company was formerly known as Sun Innovation Holdings Limited and changed its name to Digital Domain Holdings Limited in December 2013. Digital Domain Holdings Limited was incorporated in 1992 and is headquartered in Central, Hong Kong.

How the Company Makes Money

Digital Domain Holdings generates revenue through multiple streams, primarily by offering visual effects and animation services to major film studios and production companies on a project basis. The company also earns money from its proprietary technologies and intellectual property, which can be licensed to other businesses in the entertainment industry. Additionally, it engages in partnerships with brands for advertising and marketing campaigns, creating immersive experiences that integrate digital content. The growth of the virtual reality and augmented reality sectors has further contributed to its earnings, as the company develops content for these emerging platforms. Strategic collaborations with other media companies and participation in co-productions also enhance its revenue potential.

Digital Domain Holdings Financial Statement Overview

Summary

Digital Domain Holdings is facing financial difficulties, with persistent losses and declining revenues impacting margins and cash flow. The balance sheet shows a reliance on debt, which, combined with negative cash flows, poses liquidity risks. The company needs to address operational inefficiencies and improve cash generation to stabilize its financial position.

Income Statement

The company has seen a declining revenue trend, with a significant decrease in total revenue over recent years. The gross profit margin has been weak, indicating high costs relative to revenue. EBIT and EBITDA margins are negative, signaling operational inefficiencies. The net profit margin is also negative, which further emphasizes the company's struggle to achieve profitability.

Balance Sheet

The balance sheet shows a moderate debt-to-equity ratio, suggesting that the company relies on debt financing. The return on equity is negative due to continued net losses, impacting shareholder returns. However, the equity ratio indicates a reasonable level of equity financing compared to total assets.

Cash Flow

The company's cash flow situation appears weak, with negative operating and free cash flows across the periods, highlighting cash generation issues. There is no free cash flow growth, and the operating cash flow to net income ratio is unfavorable, reflecting challenges in converting income into cash.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	777.44M	625.83M	736.50M	958.65M	864.21M	601.30M
Gross Profit	177.82M	127.44M	120.19M	216.86M	123.97M	64.73M
EBITDA	-186.81M	-245.89M	-303.58M	-87.59M	-628.69M	-429.96M
Net Income	-279.09M	-300.27M	-394.57M	-206.32M	-722.00M	-607.63M
Balance Sheet
Total Assets	1.13B	1.07B	1.25B	1.03B	1.20B	1.50B
Cash, Cash Equivalents and Short-Term Investments	374.40M	401.43M	464.71M	153.55M	247.75M	113.90M
Total Debt	470.29M	442.42M	447.69M	442.43M	367.32M	411.18M
Total Liabilities	774.84M	644.30M	746.59M	736.68M	689.31M	684.38M
Stockholders Equity	439.87M	502.92M	671.47M	375.76M	585.87M	841.43M
Cash Flow
Free Cash Flow	-92.99M	-281.24M	-169.97M	-93.81M	-121.54M	-109.76M
Operating Cash Flow	-88.58M	-238.42M	-130.55M	-54.43M	-83.03M	-73.05M
Investing Cash Flow	-75.80M	-186.26M	-80.36M	-45.34M	-257.37M	-225.73M
Financing Cash Flow	-46.66M	114.25M	639.14M	12.34M	445.40M	17.69M

Digital Domain Holdings Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 0.35
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HK:0547, the sentiment is Neutral. The current price of 0.35 is below the 20-day moving average (MA) of 0.37, above the 50-day MA of 0.33, and below the 200-day MA of 0.39, indicating a neutral trend. The MACD of 0.02 indicates Negative momentum. The RSI at 56.11 is Neutral, neither overbought nor oversold. The STOCH value of 46.03 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for HK:0547.

Digital Domain Holdings Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
Sector *	60 Neutral	$48.67B	4.58	-11.27%	4.14%	2.83%	-41.78%
1060	56 Neutral	HK$27.49B	47.00	3.30%	―	40.31%	212.50%
0136	51 Neutral	HK$39.48B	28.40	7.01%	―	-13.62%	-8.47%
2125	47 Neutral	HK$324.78M	-7.74	-2.12%	―	-41.22%	54.66%
1003	46 Neutral	HK$1.06B	―	―	―	―	―
6698	46 Neutral	HK$398.54M	-1.95	-6.83%	―	-57.29%	88.62%
0547	43 Neutral	HK$3.07B	-10.71	-49.75%	―	32.49%	13.58%