Investor Relation
Google Finance
SEC Filing
Year End: Dec. 31
July 17, 2014
2014 Q1 Data
Check list:
1.Major Business.
China B2B services provider. It has two main business, both count around 50% of revenue. One is online hosting and printing magazine. Basically let vendors to advertise product online and on magazine. Another is trade shows which is held multiple times a year at different places. Many of its customers seems likely to join both.
2.Balance sheet.
Recent Price: $7.60, Tangible book value:$3.90, Share outstanding: 29.8m, Market Cap: $230m.
Current asset:$184m, Current liability: $146m, Debt: $0m, Cash: $93m(after $50m tender offer).
Properties:
Since 2004, it has purchased quite a lot business units in Shenzhen, Shanghai, Hongkong, Singapore. with over $160m spending. At Mar.31,2014, it has totally $310k Sqft with a book value of $145m. Average price is $468/sqft. On Dec.2013, it says on its report that market value on its is $95m higher than book value. Which implies a $798/sqft market price.
3.Credit facility.
Not important
4.Financial data by years.
5.Insider holding, options, Insider trading info, share buy back.
Allan Hinrich: CEO and founder. Around 47%.
6.Management compensation.
7.Employee numbers. Revenue/Employee. Compensation/Employee.
8.Industry comparison.
Two many competitors: Alibaba and Made-in-China.com. Mainly on online business, this has caused their online and printing business shrink quite a lot recently. On trade-show part, there are many promoters. Alibaba and Made-in-China seems not hosting any.
9.Auditor
PricewaterhouseCoopers LLP
10.Major events.
(1)Feb 2008: Bought back 6.9m share by $50m. June 2010, bought back 11.1m shares by $100m. May 2014, bought back 5m share by $50m.
(1)Its online and printing business are down significantly. Printing business is down from 2007's $50m to maybe less than $10m at 2014. Online business down from 2012/2011's $120m to maybe less than $80m at 2014. However, exhibitions business grow from $50m at 2007 to now close to $90m which offset the printing revenue decline. Overall it still face down pressure from online business. Total revenue could shrink to $150m or less in coming 2 to 5 years. This probably is the major reason for its price been low.
(2)Since 2004, it has spent $200m in 3 share tender offer, $140m net in property purchase. While cash remained almost same( $60m at end of 2003, in 2005, it received 38m by issue shares. at July 2014, it should have $93m after tender offer.). Which means in past 10 years it has generated over $34m/year in FCF.
(3)Shareholder's Equity increased from $28m at end of 2003 to $151m at Q1 2014. Including the $200m tender offer and exclude the $38m in share issuing. It indicates roughly a little less than $30m/year increase in equity.
(4)Its depreciation includes intangible assets impairment and building depreciation. The real maintenance cost should be much less than the number. I estimate 1/3 for real cost, 1/3 for intangible assets impairment, 1/3 for building depreciation.
(5)Its EBITDA margin is quite consistent around 20% except 2008,2009. Originally I was bit worry about that its exhibition business has lower margin than the online business. But the margin seems stable from 2010 to 2013.
(6) Its tax cost is below 10%. 2013 tax is higher mainly because of properties sale tax incurred for sales of two properties.
(7) Estimate 10% tax rate. $150m revenue, 20% EBITDA margin, $1m interest income. $3m maintenance CAPx. $3m impairment of intangibles $2m in none cash compensation . It comes (150*20%+1-3-3-2)*0.9=$18.9m annual income.
(8) If adding $95m difference in properties carrying value and market value to book. Its tangible book value would be 7. Of course China property price might be in bubble now. So those value might not be real. But at least I believe its properties should worth the carrying price $468/sqft. Also, if the company starting to dispose more properties, it might be able to do another tender offer in future. However, it may continue invest more cash in properties which is more risky now.
(9) Overall, current price is pretty cheap already. However, the main risk lays on the online revenue shrink and also the property investment strategy. I wish the price could be even cheaper.
Oct. 27, 2016, Q2 2016 Data
Current price $8.10.
After another buy back of 6.6m shares at 2015, now it has less than 24m shares. Hinrich now controls around 2/3 of total shares. Tangible book value around $5.75/share. Cash $3.6/share. If adding $100m in fair value of real estate, book value around $10/share now.
2015 EBITDA is around $31m. First half 2016 EBITDA is around $13m. 2015 sales of subsidiary and property disposal created more than $10m after tax income.
With the large cash on balance, I suspect the company might do another tender offer. However, since Hinrich has so many shares now, he might consider dividend this time.
(8) If adding $95m difference in properties carrying value and market value to book. Its tangible book value would be 7. Of course China property price might be in bubble now. So those value might not be real. But at least I believe its properties should worth the carrying price $468/sqft. Also, if the company starting to dispose more properties, it might be able to do another tender offer in future. However, it may continue invest more cash in properties which is more risky now.
(9) Overall, current price is pretty cheap already. However, the main risk lays on the online revenue shrink and also the property investment strategy. I wish the price could be even cheaper.
Oct. 27, 2016, Q2 2016 Data
Current price $8.10.
After another buy back of 6.6m shares at 2015, now it has less than 24m shares. Hinrich now controls around 2/3 of total shares. Tangible book value around $5.75/share. Cash $3.6/share. If adding $100m in fair value of real estate, book value around $10/share now.
2015 EBITDA is around $31m. First half 2016 EBITDA is around $13m. 2015 sales of subsidiary and property disposal created more than $10m after tax income.
With the large cash on balance, I suspect the company might do another tender offer. However, since Hinrich has so many shares now, he might consider dividend this time.
