Sorry, typo correction "going to shoot above RM1.00"

@ Alpha Trader

"haha, argue so much for what, I told you how to value Aemulus

15X 2016 P/E, annnualise latest numbers + 20% growth + 15% forex gain - RM0.75"



For the forummers here, below is a calculation exercise example. Please use it as an academic reference only (and make your own judgement on the value of the share because each individual has different ways to perceive value versus risk):


i. Financial year is 1 Oct 2014 to 30 Sep 2015 (12 months) i.e. FYE2015

ii. 9 months of FYE2015, PAT is RM7mil.

iii. Q3 FYE2015, PAT is RM3.7mil.

iv. Approach A: Annualised RM7mil is equivalent to RM9.3mil

Approach B: RM7mil + RM3.7mil = RM10.7mil (assuming Q4 PAT is same as Q3 PAT)

Approach C: RM7mil + RM7mil = RM14mil (assuming Q4 PAT is equivalent to 9 months PAT)


v. Total shares outstanding = 438.9mil shares

vi. P/E ttm (Approach A) = 438.9 mil shares X RM0.56 / RM9.3mil = 26.4

P/E ttm (Approach B) = 438.9 mil shares x RM0.56 / RM10.7mil = 23.0

P/E ttm (Approach C) = 438.9 mil shares x RM0.56 / RM14mil = 17.6


vii. P/E ttm of ELSOFT = 16.5

P/E ttm of VITROX = 14.8

P/E ttm of MMS Venture = 9.4

P/E ttm of Pentamaster = 11.3


viii. Even if Aemulus achieved PAT of RM14mil for FYE2015 (i.e. the profit for the final quarter is equivalent to three quarters' PAT combined!), the current valuation (i.e. RM0.56 per share) is still higher than its peers on P/E ttm basis.



Using Alpha Trader's assumption of forward P/E of 15, growth of 40% (5% more than what he actually suggested of 35%) and FYE2015 PAT of RM15mil (even higher than RM14mil which is already a very optimistic figure):

Target price = 15 x (RM15mil x 1.40) / 438.9mil shares = RM0.72 (still lower than RM0.75)

As you can see from above, some prices being shouted here (e.g. "going to shoot above RM1.0mil", "at least RM0.80" and etc) have to be taken with serious care. This share has already moved into the territory of share price driven by "non-fundamental" factors. Trade wisely.

1. Wow, from "bursabullalways" to "Zbaikitree" and now "zbaikitree2". Hopefully you won't get banned again from being rude and abusive. I have to admit that your tenacity is admirable....to take all the effort to create another profile (i.e. "zbaikitree2") at around 4pm today when Aemulus's share price was rising so that you could start to post comments of "see, i told you so! I am correct". I guess you are really desperate to prove yourself. But sorry to burst your bubble. If you thought today's share price rise meant that your comments were right/accurate, I think you have underestimated the intelligence of the forummers here.


2. You still have not provided a clarification on your previous remark that Aemulus has no competitors in Malaysia despite the company's prospectus suggested otherwise. Shooting from the hip? Or deliberately misleading others? Only you have the answer.


3. You still have not show how you have derived a figure of RM25mil as the money made by the VC fund. Just a hint to you, even at today's closing price of RM0.56, the correct figure is no where close to RM25mil. Again shooting from the hip? Or deliberately misleading others?

By the way, you have helped to draw "unwanted" attention to the VC fund because if the fund delayed last week's selling to today, they would have made easily another 10% to 12% (estimation). So either you (i.e. "zbaikitree2") is smarter or the VC fund is smarter. Only you have the answer.


4. Lastly thank you for re-posting my earlier posts. My underlying message has always been "Know what you are trading. You may make money or lose money but always know the reason behind it. Don't let others fool you". It is very sad to see some people try to mislead others (either through sheer ignorance or maybe with ill intention) to believe the shares that they are trading are undervalued based on "fundamentals" when the real situation is that the shares are overvalued due to hype and syndicate play. The misinformed or unsuspecting traders could be caught because they don't know the nature of their shares (i.e. fundamental stocks or speculative stocks). I sincerely hope "zbaikitree2" would stop being rude, abusive and most importantly stop misleading others. People's money are involved here.

First and foremost, "bursabullalways" is likely now known as "Zbaikitree" because "bursabullalways" has been banned from posting until 4 Oct 2015 due repeated abusive postings (you can verify this by looking at bursabullalways profile page).

Unfortunately "Zbaikitree" still continues to mislead and spew out inaccurate information.


Please refer to the below replies:

Zbaikitree: "VENTURE CAP DO NOT WANT TO LOOK "STUPID" BY SELLING AT THE WRONG TIME? WAKAKAKAKA. WHAT LOGIC. FOR A 2MILLION SEED CAPITAL CHOK HAS MADE 25MILLION PROFIT AT CURRENT PRICE. 1250% RETURN IN 5 YRS. STILL LOOK STUPID?"

- Reply: It is very clear that Zbaikitree did not even made an effort to read through the prospectus to get the proper information to calculate how much the VC fund made at the current price. For heaven's sake, please don't simply throw out a figure (of RM25mil) because the figure is far from being accurate. I will not provide the correct figure here because Zbaikitree should be showing to all how he calculated the figure of RM25mil. Perhaps more importantly is the fact that Zbaikitree has unwittingly demonstrated to all that the VC fund has made enough to start selling off and not take any further risk. Does Zbaikitree ever thought that maybe the VC fund feels the company is already fully valued or the share price is reaching frothy level? This is because based on "bursabullalways" premise that the share price can still go very much higher, why is the VC fund so eager to sell off now? Does it mean the VC fund purposely does not want to make more money? By the way, Aemulus will be closing its FYE2015 on 30 Sep 2015. Announcement of full year performance will be about 3 months from now. Why sell now if maybe in three more months, the share price can be very much higher?


Zbaikitree: "GO ASK CHOK, WAKAKAKA. THE FUND NOT RECYCLED? THE FUND IS NEEDED FOR NEW VENTURE WHY DO U THINK THEY CALL THEMSELVE VENTURE CAPITAL?
YOUR ANALOGY IS JUST LIKE A BANK ONCE THEY LOAN ONE TIME TO THE CUSTOMER THEY WILL RETURN THE CAPITAL TO THE SHAREHOLDER AND DO NOT LOAN TO ANOTHER CUSTOMER AGAIN? WAKAKAKAKAKA. WAKAKAAKAK. HOW STUPID AND SIMPLY COME OUT WITH EXPLAINATION."


- Reply: Again, Zbaikitree's above comment showed of his utter lack of understanding of how VC fund works. After the VC fund returned the money to the limited partner (shareholders of the fund), the VC fund manager will try to raise the next fund if it wants to continue to invest. Therefore, you can see some VC fund managers have multiple funds in succession (e.g. Fund I, Fund II, Fund III, Fund IV....). I advise Zbaikitree to read more about VC fund/investment before commenting further because his ignorance could lead others to be wrongly informed.


Zbaikitree: "WHERE? SHOW ME WHERE CHOK GIVE YOU IMPRESSION WOULD STAY IN MEANINGFUL WAY POST LISTING? THEY ONLY SAID THEY WONT EXIT ALL. MORON."


- Reply: I trust other forummers who read the article can form their own opinion on what is implied between the lines.


Zbaikitree: "MORON, FACEBOOK AND TWITTER IS USED AS AN EXAMPLE, AND YOUR SO MORON TO THINK I M COMPARING AEMULUS TO FACEBOOK?
SIMILAR COMPANIES? AEMULUS IS ONE OF ITS KIND IN MALAYSIA, THEY HAVE NO COMPETITOR IN MALAYSIA. SO STUPID JWARREN."


- Reply: Zbaikitree, again please don't mislead others and make comments without any regards to accuracy and truth. Aemulus does have competitors in Malaysia. In fact, in their prospectus there is an attached independent research report that stated Aemulus is one of the many ATE players in Malaysia. In the report, the below ATE players were listed as in the same industry/space as Aemulus:

1. Elsoft
2. MMS Ventures
3. Advantest
4. Circuit Check Asia
5. Keysight Technologies
6. LTX Credence
7. NI South East Asia
8. Tektronix Malaysia
9. Teradyne


As mentioned before, please know what you are trading. You may make money or lose money but always know the reason for it. Don't let others fool you.

- Aemulus: P/E ttm of 18.7 (@ share price of RM0.515 and assuming Q4 FYE2015 net profit of RM5mil !)


5. "fyi, their biggest client is Avago, follow by Unisem. where is the competitors? how come Avago don't buy from their competitors? come talk here after you do research on Aemulus. and challenge me." AND "do u know who is Avago or not? Inari has been sucking the milk since 3 yrs ago and has grown from a 4 feet guy to a 33 feet giant in the span of 2 yrs."

- Based on "bursabullalways" above comments, they either showed that Avago is a badly run company because it allowed its suppliers/vendors to "milk" itself and practise single supplier/vendor system OR "bursabullalways" just shoot from the hip without any concrete information/reasoning.



7. "hallo moron, if they have more longer solid year of record prior to IPO, they would have listed in Main Board liao. its like you take a Airasia flight in economy class and complain no satay to eat no free wine. hmmm... seems like some imperfection in your logic system. btw. to list in ACE mkt, no profit also can list lu tau ka. you can list your company in nasdaq even when it make losses. o learn more about stock and bursa and semiconductor industry before open your big mouth la.continue your coma for 1.5 year pls."


- Above is an example of a comment by an abusive and unreasonable person.

- Based on "bursabullalways" own internal logic, I want to ask this question - Why not list Aemulus in Singapore (since Avago HQ is there)? Why not list Aemulus in AIM London (more international)? Why not list in Australia (high valuation for tech related stocks)?

- Btw, can you introduce any investment banker in Malaysia who can help to list an unprofitable company? Better still, why not "bursabullalways" state to us the ACE companies listed within last three years that went IPO without any profit on listed year?

Prior to my posting on Aemulus, I have not posted anything here for a long time because of rude, unreasonable and plainly abusive forummers. Seems like things didn't change much here.

A forummer such as "bursabullalways" is rude, abusive and rather lacking of the capacity to engage in logical and sensible discussion. A country made up of such type of persons would never progress.

I am not interested to challenge "bursabullalways" to a contest of who is right, who is wrong. The reason I am here is to share (and learn) about investing in public listed companies. However due to some rather misleading and some clearly factually incorrect matters shared by "bursabullalways", I have to list down below my counter-arguments for other forummers' information:


1. "VC would cash out in any listing, that is why they push for a listing. all ipo google Facebook grouponn whatever ipo no matter how grand, the vc by their own rules must cash out partial.."

- Bursabullalways' above comment is very misleading. While VC funds would need to liquidate their position eventually, they do have a time-frame to do so (typically up to one year) post IPO. The norm is that the VC funds would use this time-frame intelligently to draw the maximum profit by timing the market and importantly by gauging the future prospect of the company. Most VC funds are not "forced" to sell their shares by their limited partners (i.e. parties that put money in the VC fund) and neither do they set an automatic trigger to pare down. Fyi, most VC funds do not want to look "stupid" by selling at the wrong time (e.g. sell at a price that is way below the potential market price).


2. "VC is like a developer of property company, after they build rolls of houses, they will have to sell some, they won't keep all no matter how enticing, as they need the working capital."

- Again another "wrong" comment by "bursabullalways". The VC industry norm is that money returned from their investment would not be recycled (i.e. cannot be reused to invest again). Most VC fund would return the money back to their limited partners. Bursabullalways' suggestion that VC needs working capital clearly shows his lack of understanding of how VC fund works.


3. "read carefully and don't misquote chok of teak capital like all reporter misquoted our ministers speech. she said not exiting its investment ENTIRELY."

- In fact, the article shared by "bursabullalways" himself have given the impression that the substantial shareholder would stay invested in the company post-IPO in a meaningful way. But the reality is that after about one week post-IPO, the substantial shareholder has ceased to be a substantial shareholder. For other forummers who might not be aware, once a substantial shareholder ceased to be a substantial shareholder, the company is no longer required to make announcement of any change in the shareholder's shareholding. Therefore as of now (last trading day on last Friday), the previously substantial shareholder could be holding just a couple thousands of shares. We may only find out through access to the official share registry or wait for the top 20 shareholders' list in the annual report which will be out around Dec 2015!

4. "when FB going for listing, they don't even have earning.
same like Tweeter and all those. what r u talking about? current valuation is ahead? of proven companies? pls tell me which are the proven companies and what is their 2016 PE."

- To even suggest that Aemulus' case to be compared to Facebook and Twitter (which bursabullalways could not even spell correctly) is plainly an irresponsible act by "bursabullalways". I trust most other forummers know what I meant when I said Aemulus when compared to other similar companies (e.g. Vitrox, ELSOFT, Pentamaster).

- Since "bursabullalways" need to ask for P/E information, below are the estimates:

- VITROX: P/E ttm of 14.77
- ELSOFT: P/E ttm of 15.98
- Pentamaster: P/E ttm of 11.75
- Aemulus: P/E ttm of 18.7 (@ share price of RM0.515)

A substantial shareholder of the company has been selling down systematically since IPO! This is the same shareholder that mentioned before IPO that they would stay after IPO because of the growth story. Draw your own conclusions.

The current valuation is ahead of more established and proven "similar" companies. The company recorded only one solid year of growth (i.e. FYE2014 with RM8mil profit) prior to the IPO. The current 9 months profit is about RM7mil. If you go a little back further (i.e. last five years), you will see a better picture of the company's growth pattern and less than stellar performance.

The main story of the potential growth has been new models being rolled out and the semicon industry ramp-up. But are things so simple?

As usual, traders would trade with or without fundamental justifications. Some make money, some lose their pants. Always know the reason for your winning and your lost. Don't be a blind fool.

reply to insearch85:

First and foremost, I think you are decent person who asks valid questions (good traders or investors always ask good questions either to themselves or to others). I will try answer your questions in the best way I could:

i) "full time and to focus on Catcha" - I took interest in Catcha Media because I did owned its shares before, but has since sold them off at a very tiny profit. I did not comment on other stock counters is because I am not familiar with their industries. I am not "a full time person", "a hired hand", "an ex-staff" or "a business competitor". I was astonished by certain target prices bandied around and the justifications for them. I thought I must write something to give a different perspective (and to see how the readers will react to it). Whether you believe it or not, it is entirely your choice.

ii) You could have misunderstood the word "dodgy". A "dodgy" name does not mean something is wrong with the name itself (e.g. the name is too hard to pronounce, cultural insensitive and etc). What I meant by dodgy is the fund does not seems to be a reputable entity with well known track record. Oh by the way, did you realized that the entry of the fund coincide with the market sell down in the related Australian counters?

iii) About traders making money on the counter from RM0.60 to RM0.90. Good for those traders. If you traced back to all my postings about Catcha Media, I have never said trading the counter is a bad idea (but you must know what you are getting into). I always remind the readers of "know why you lose money but also know why you make money". If a reader has read my postings and understood the content and the timing, I believe the reader would have made realized gain (instead of paper gain) by buying/selling before each "new" peak (which almost always followed by a period of lack of volume). To those who believe in "target prices" given by certain parties, did you keep your shares until the target prices are reached? Have you realized your gain? I have wrote before about how these certain target prices were derived based on flimsy arguments.

To those who bought the counter at IPO and still keeping the shares, what's your feeling? I was not an IPO buyer, so I can't answer this question.


reply to whkwoon:

i) Catcha Media grew by 400%? Or are you referring to iCar, iProperty or iBuy?

ii) "Land grab" in the online world is a valid strategy. But do you know that iProperty's main competitor has been profitable for many years. Do you know that iCar's main competitor (cum shareholder) is also profitable for some years? In the online world, sand shifts very fast. Your DKSH example is a good one but not exactly relevant to online businesses. DKSH build distribution networks (physical assets - more CAPEX than OPEX). Nowadays online businesses (for those without genuinely novel and superior technologies just like Catcha type of businesses) mostly expand by having more OPEX rather than CAPEX. CAPEX investments are harder to replicate over night but not so for OPEX. CAPEX can be still monetized but OPEX is almost a wash down the drain. In many online businesses, once the cost of acquisition is too high with no comparable monetization in sight, the business is bound to fail in the long run.


About Dodgy:

1) Dodgy is an interesting contributor. He contributed just three postings throughout his membership (by the way he is member for less than a week). These three postings were above. I am sure you are aware of his intention which were very clearly to spew profanities and nonsense at me. Draw your own conclusions about Dodgy.

reply to bjdila123 - Are you referring to the story in The Edge about Catcha Group buying LivingSocial South East Asia's business?

Fyi, this news is not directly related to Catcha Media because Catcha Group is only a shareholder of Catcha Media. Also, the company that buys LivingSocial South East Asia's (SEA) business is actually iBuy (another Catcha Group company) which is listed in Australia. Catcha Media has already "transferred" its e-commerce businesses to iBuy. Btw, the e-commerce business was bleeding badly. Also, LivingSocial SEA is well known to be a "sink-hole". The origin of LivingSocial SEA is a company called Ensogo (a Thai company started by two brothers). The brothers laughed off to the bank after selling Ensogo to LivingSocial. You get the picture...

The most likely reason for the share price movement lately is the mopping of shares by this so-called fund, Absolute Investments Australia. A name not often heard. A rather dodgy name to be precise.

Fyi, as of 10.50am (Malaysian time):

- iBuy dropped 13.5%
- iCar dropped 6.1%
- iProperty dropped 7.9%

Is it due to the drop in NASDAQ on last Friday? Or is it due to other reasons? You draw your own conclusions. Have a nice day.

-Increase in share price of Catcha Media for the past few days was on the back of very low volume.

-Yesterday's sharp increase was because of the release of iCar's annual presentation. iCar went up yesterday but today the share price slid down again. In the presentation, iCar is expected to be profitable only in 2016!

-Draw you own conclusions, my friends.

reply to whkwoon:

1) Sorry Sir, I do not follow these stocks: Hovid, Benalec and Gadang.

2) Absolute Investment Australia Pty Ltd is not a "familiar" name at all. Do some background check and you will know what I mean.

reply to jbhotleo:

- Thanks for info. Certainly heard about the shakiness of that account but didn't hear about actual confirmation. Anyway, thanks again for enlightening the readers.
- I presume you are from the industry?

reply to insearch85:

- The article that you have posted is definitely useful for the readers.
- Just want to point to you and others on the last few sections of the article. The terms of carsales.com entry into iCar. Do you think the terms are suggesting that carsales.com might want to buyout iCar in the very near future? If you want to buyout or to buy a controlling stake, it is not favorable to have those terms.

reply to Paul Tan:

- Catcha Media has disclosed the closure of their e-commerce business in their Q4 2013 financial report. Excerpt from the report:
"The Group ceased its E-Commerce Business in the first quarter of 2014..."


query to jbhotleo:

- Where and when did this "Catcha Media has lost the lowyat.net business" come about?

reply to halia - No, I don't have any Catcha share at the moment.

reply to whkwoon - Agree with you. That's why most of the time I take analyst research report (and target price) with a pinch of salt. Some companies are extremely good in "selling" the future prospects of their businesses, therefore try your best to read in between the lines (and of course some knowledge of the industry/sector and business domain will be very helpful).

carsales.com bought iCar shares at AUD1.00 yesterday (the new shares were officially issued on 5 Mar 2014). On today, the share price has increased to AUD1.425 (increase of 42.5% in one day). Don't you think this is strange? For everybody's info, at AUD1.425, iCar's market cap/revenue multiple has reached 180 times! To put into perspective - Facebook's market cap/revenue multiple is about 22 times, Google's is about 6.8 times and Twitter's is about 64 times. Enter iCar only if you can afford to take shocks (and in return you might have a chance to gain more but how much more? Only time will tell).

As for Catcha Media, FY2013 financial results are a big letdown. Revenue decreased and the company went into the red again (loss of RM3.7mil). The losses would have been bigger if not for the gain from the sale of a small stake in a subsidiary for the amount of RM1.7mil. By the way, FY2012 would had been red as well if not for the sale of a subsidiary to guess what! iCar (to facilitate the IPO in case you have forgotten about it). The gain for the disposal was RM18.8mil! So without the RM18.8mil, FY2012 would be a loss of RM13.6mil! Isn't this company an interesting company?

But having mentioned all the above, there is a positive development in Catcha Media. The Company has finally decided to kill off its e-commerce business which has been bleeding for a while (e-commerce business was the one that dragged down Catcha's profits). This is good news but if iCar continues to bleed, Catcha Media's profit will again be affected because iCar is an associate of Catcha Media (folks, we are talking about accounting stuffs here). On more important note is that Catcha Media's traditional & core businesses (online media and publishing) are declining in terms of revenue. This is not good.

As to the statement by whkwoon - "Carsale.com will not put money in icar if the business is not variable..". Please refer to my earlier posting with the section on "...You see with only a cost of about AUD20.4mil for 22.9%, carsales.com has built a hedge over its competitor....."

reply whkwoon:

1) There is a misconception that online businesses such as online classified business like iCar are "IT" companies. They are not. As for Catcha Media, it is a combination of online advertising, online + offline publisher, e-commerce and online classified businesses. Again not exactly an "IT" company.

2) While it is true that telco's upfront infrastructure cost is heavy, do remember that most telcos are quasi monopolies (i.e. their infrastructure costs are safeguarded by having exclusive spectrum licenses).

3) Fyi, iCar's "infrastructure" cost is not high by most means. Their consolidated property, plant & equipment book value is only AUD670k while intangibles are AUD6.7mil (with about AUD4.7 as goodwill arising from acquisitions). The bottomline is that the upfront investment cost for businesses like iCar and Catcha Media (to a large extent except for its e-commerce business) is minuscule when compared to businesses like telcos, cable & satellite media network operators, data warehouses and e-commerce (e.g. Amazon, Rakuten) businesses.

4) The main issue with online classified business is the amount of money spent to acquire listings, eyeballs and sales leads. This is the "break or make" number for most online classified businesses. If you look at iCar's numbers in detail, the topline growth figures do not tell the whole story. Below are some figures of iCar for everyone to think about:

- Revenue per listing has increased from AUD2.04 to AUD3.80 (increase of 86.4%) - Very good
- Revenue per audience has increased from AUD0.26 to AUD0.38 (increase of 49.5%) - So far so good. However....

- Revenue per lead has decreased from AUD9.90 to AUD2.24 (decrease of 77.4%). This is a very negative situation because the lead generated through iCar is either getting less effective in terms of converting to actual sales OR the lead generated through iCar is fetching lower classified fees.

The story gets more interesting (sorry in a more negative manner):

"Advertising and marketing expenses" is the best estimate to gauge the amount of money spent to acquire listing, audience and leads.

- Cost to acquire one listing has increased from AUD0.73 to AUD3.60 (increase of a whopping 390.6%).
- Cost to acquire one audience has increased from AUD0.09 to AUD0.36 (increase of a staggering 293.6%).
- Cost to acquire a lead has suprisingly dropped from AUD3.56 to AUD2.12 (decrease of 40.5%). This is not consistent with the immediate above. Therefore, it could mean the lead generated by iCar in FY2013 is of lesser quality (due to lower payment for each lead) as compared to FY2012 (this could be the likely case because of each lead was actually generating less revenue in FY2013- refer to above).

- Do take note that each listing was acquired using AUD3.60 and each listing generated a revenue of only AUD3.80 (a margin of only AUD0.20). Take note that HR cost, overhead cost and other costs have not even been included yet! HR cost was nearly 3 times of advertising & marketing expenses. This was why iCar suffered a massive loss in FY2013. One could argue iCar is spending money to "land grab" but is this viable for the long term when the competiton is so great and the land could be just shifting sands? Only time will tell.

reply to insearch85:

Congratulations to you for making money on your Catcha shares. Good job.

Please don't be mistaken that my postings are telling the readers that Catcha is a not profitable counter for trading. It never did so. I hope you have had the opportunity to read my previous postings on Catcha as I have been emphasizing that a trader should know why he/she makes money and why he/she losses money. I mentioned if before and I will mention it again here, when you make money out of trading a counter, please sit back and reflect why you managed to make money.

A lot of traders blame bad luck, share manipulation, unforeseen economic situations, untruthful tips and etc etc, when they lose money. But when they make money because of pure good luck, riding on the coat tails of big sharks manipulating the markets, capitalizing on knee jerk reaction to economic situations, having really good tips and etc etc, they claim that they are the ONE who knows it all (i.e. I have the real skills in stock picking, reading price trends and knowing what kind of business will thrive and etc etc). You have to decide whether you are such type of trader or not. Be honest to oneself is a good starting point in becoming a "more success, less failure" stock trader.

For a smart reader, when they read about my analysis on Catcha, they would digest it, think about it and then make their own conclusions. Using their own conclusions, they would make their next move (either load up more, dump to take profit or hold on for more profit).

Nobody can predict accurately share prices all the time...absolutely nobody. The most depressing part is when some traders do not even realize that their counters are actually "play" counters. They think their counters are fundamental stocks after reading some analyst' "fundamental" analysis. Tragic so tragic.

So for insearc85, please give yourself a good pat on the back for making a profit out of Catcha counter. You deserved it.

Sorry, forgotten to mention one more very important point:

iProperty (sister company of iCar) has sold off all its shareholding in iCar. Mmm, why sell so soon? Maybe it is because iProperty needs to report a profit for FY2013? Do you know that if without the sale of its stake in iCar, iProperty will report a loss for FY2013 (it would have been the sixth consecutive year of losses).

The reason is because Catcha's iCar in Australia has reached all time high price of AUD1.39 on the back of today's (5 Mar 2014) announcement that carsales.com has bought another stake in iCar at AUD1.00 to bring its total shareholding to 22.9%.

Most analysts have written that Catcha is worth their target price is because Catcha's stake in iCar is already more than cover their target prices. This argument is very misleading because of the below:

a) Firstly, the monetization of the stake in iCar is not so simple to begin with as Catcha owns about 30% of iCar. I tend to believe there is only a limited number of buyers that will be interested and has the financial muscles to do so. This is because iCar has a market cap/revenue multiple of nearly 120 times, whereas Facebook's revenue/market cap multiple is only about 22 times, Google's is about 6.8 times and Twitter's is about 64 times. Even iCar's main competitor in Australia, carsales.com is only about 12.5 times. Talk about 'valuation through the roof'... more about carsales.com at below (remember to read it).

b) Secondly, even if Catcha do managed to sell its stake in iCar, will Catcha return the sale proceed to its shareholders? Please bear in mind that Catcha can still go on with its current business because iCar is not its core business. The sale proceed of iCar would then get stuck in Catcha (and Catcha can continue to lose money without any serious ramifications). The minority shareholders has limited influence on how the sale proceed should be used, remember that!


Draw your own conclusion on iCar :-

a) iCar's revenue in FY2013 was only AUD1.75mil despite being in so many countries and a trail of acquisitions.

b) Loss in FYE2013 was at a staggering AUD6.9mil.

c) The operations bleed AUD5.6mil in FY2013.

d) If not for the issuance of shares to carsales.com in Apr 2013, iCar would have gone cash deficit of AUD1.54mil...cash deficit less than 1.5 year after IPO!

e) Now the million dollar question is carsales.com going to buyout iCar? For your information, carsales.com cannot increase its current shareholding of 22.9% without making a mandatory general offer for the rest of the shares.

I believe the more insightful question is does carsales.com needs to buyout iCar? Remember that iCar is trading at a much much higher valuation that carsales.com and iCar would have gone into deficit cash flow if not for carsales.com. The way I see it is carsales.com does not have to buyout iCar because at the current situation, carsales.com is already having the upper hand. At 22.9%, carsales.com is in the "control" seat to stop/deter any unwanted attempt to buyout iCar. Furthermore, if iCar's share price goes bust, carsales.com can pick them up cheaply. If iCar's share price goes up a lot, only the brave souls or brave fools would dare to consider a buyout. If some fools really want to buy, carsales.com can sell its shares and laugh to the bank. You see with only a cost of about AUD20.4mil for 22.9%, carsales.com has built a hedge over its competitor. Fyi carsales.com's market cap is AUD2.5 Billion and last audited profit was AUD83mil. Who is being smart now?

To be continued (...the next chapter is about Catcha)....

ocpd - I'm with you on your observation of Catcha Group and Catcha Media. Do check out my previous postings (somewhere above).

Continued from above. In such an environment, growing from RM60mil sales in 2012 to RM500mil sales in 2015 is really very very tough unless REV has found a one-of-a-kind method to monetize the restaurant patrons in a way never seen before. Who knows maybe Cuscapi has found such "secret sauce"? As I said, sometimes we need "hope" to move the market.

It's good that Yi is full of hope. Sometimes that's what sorely lacking in our share market.

I think Yi has wrongly stated that exponential growth happens during mature stage. In mature stage, companies have fairly stable growth rate or low growth rate.

The point I am trying to make is Cuscapi's REV is not a pure Internet play where rapid customer adoption and acquisition can take place in a relatively lower cost due to the nature of the Internet. To grow to RM500mil sales, imagine the number of REV tablet to deploy on-site and the number of new clients to approach for sales pitching & proofing of concept in places like Middle East and India (for people who has done business in Middle East and India, you know what I mean).

Also remember that the REV approach requires the clients/restaurant owners to share certain portion of their additional revenue with Cuscapi (in return for not paying Cuscapi for the tablet). Chinese and Indian businessmen are shrewd people. The moment they smell there is money, you'll have competition sprawling.

reply to zamsaham - This place is a good platform for investors/traders to share knowledge. I hope your statement that lowyat.net will be floated in 2015 is not a "joke".

Initially I thought the overall strategy of REV is good and highly possible. But after reading The Edge article where the CEO stated that the target is to grow 10x in about two years, I begin to have doubts. Just imagine the upfront cost of the tablets and the cost of working the ground in two unfamiliar markets (i.e. Middle East and India). Btw, China's consumer market growth is also a big unknown at the moment due to the changes in China's economy for the next five years. In summary I think the Company is a bit too ambitious.

reply to whkwoon - Just wondering how do you came about with Lowyat's numbers (i.e. RM15mil advert sales per month)? If this is accurate, Lowyat is about 2.5x bigger than Catcha and Innity combined, in terms of sales. Fyi, Catcha and Innity were each doing about RM38mil sales on last year.

reply to looksee - thanks for the analogy. We can look from two angles.

First, if you found such old Rolex, what would you do? You'll probably buy it for yourself no matter what because you saw the "real" value that no one else could see. Basing on this line of thought, shouldn't the counter be privatised quickly (especially when the market cap is very much lower than the current level)?

Second, how do you be certain that the old diamond is really RM80k? In the stock market, market capitalisation is perhaps the "best" estimation of the value of the company (a shout out to whkwoon). As mentioned, it is only an estimation through consensus of buyers/sellers. If the consensus is arrived between only a small number of buyers/sellers (i.e. low transactions), then can the estimation be considered as reasonable? That's why when it comes to M&A involving public listed companies, an independent valuation is required. The valuation does not just take market capitalisation as the final value. So many factors are involved. Some are known to public and some will never be known by public.

reply to looksee - Again this is somewhat "old" news. It already happened about a few weeks ago during intra trade day. Like I previously mentioned, don't just look at market capitalisation only. Also look at the volume traded. This will give you a different perspective on the valuation. Most importantly after nearly 6 years of listing, the company has not been profitable. The Malaysian related counter is good for trade only for the informed.

reply to kengteck68: The Company's related ASX counters (i.e. iCar and iProperty) are at all time highs. However, these high valuations were achieved on relatively low volume. If you look at the historical price charts, you'll notice the prices steadily increased and then out of a sudden, a larger than usual volume (although larger but still small in absolute terms) is transacted. The prices then go steady again with low volume until the next spurt in volume and price.

If you have followed certain local analysts' report on the Company, the main argument of why the Company is undervalued is because the Company's investment in iCar is already made up of the entire market cap of the Company. With the above situation (i.e. high valuations with low volume on top of dismal financial performances), one has to think again whether the Company's investment is "cashable" within a market support level which still cannot be firmly ascertained. The most likely scenario that the investment can be cashed out at such high valuations is when there is a very gung-ho M&A player (i.e. total buyout).

Does all the above sounds similar? When one trades stocks and makes money, one has to know why. When one trades stocks and loses money, one also has to know why. Don't trade blindly is the name of the game.

Referring to http://bursakaki.blogspot.com added by whkwoon:

This merger is old news. The reason why it has been talked again recently is because after many months, the merger is finally completed from a legal perspective. This is the merger where Catcha needs to pay out RM6.0mil cash (plus shares in the new holding company) for settlement. The company has got minimal cash (based on its latest disclosed financial results) to pay unless rights issue, selling off its investments or taking out a loan. Catcha has until end of the year to pay the cash.

As mentioned earlier, the whole group (including related ASX listed companies) has been aggressively doing acquisitions. Nothing wrong with it if the acquisitions are meant to further strengthen the core businesses or to diversify the core businesses into other higher growth businesses. But if the acquisitions were done to "save" or to "cover for" unsustainable core businesses, then the value proposition of the stock (including the related ASX counters) needs to be examined further. So now, which is the case for this particular group (i.e. "acquire to grow" or "acquire just to keep the house of cards from falling")? You draw your own conclusion.

Also, check out disclosures of certain management team members' disposal of this stock (i.e. Catcha Media). This can perhaps give you a better feel of the company.

Reply to Whkwoon - You are referring to which company's present Directors & Shareholders? If you are referring to Catcha's, are you saying the company's present Directors & Shareholders are very "special" people? I'm not saying this counter is not worth trading but to say this counter is a fundamental stock, it is rather not accurate based on its past and most recent quarter financial performance & position. The whole Group (Malaysia and Australia) has been relying on acquisition to grow (pls check out their announcements and disclosures). The acquisitions were mostly using share swaps and cash from IPO proceeds. They are not generating cash fast enough.

Pls back up your comment such as "..should go up further still very cheap.." with reasoning like why it is still very cheap?

Regarding the merger, Catcha needs to pay out RM6.0mil cash (besides the issuance of shares in the new holding company) as settlement for the merger. Looking at its 1H2013 financial results, Catcha does not seems to have enough cash to pay (cash and cash equivalent as at 30 June 2013 is only RM525k!).

Its related stocks in ASX are all loss-making with very high valuations. The cases of Asiasons, Liongold and Blumont should be a reminder that strong fundamental stocks are safer bets.

Yo Zam, the stock is fundamentally strong? The first half year results certainly did not showed it. Revenue dropped, profit dropped. Cash and cash equivalents are only RM525k! as at 30 June 2013.