Tuesday, August 28, 2012

Catcha Media: In the eyes of an analyst vs mine

Catcha Media reported its earnings yesterday. I originally thought of writing something today, however before that, I read an analysis from a local investment banking firm. It says as below:

To summarize, basically it says Catcha is not doing well and below their expectation. It in fact made losses over half year 2012. However, the investment banking firm expects the company to turnaround with better results due to the following:
  • its foray into online regional auto (via iCar) portal looks good in the future;
  • its acquisition of an online e-commerce business Haute Avenue looks good as it promised a profit guarantee of SGD1.5m per annum.
The Investment Bank values the company at a price of RM0.77. Catcha is trading at RM0.52 currently. Hence, it calls for a Buy.

My analysis

I am looking at the perspective of business. How it will trade I do not know as the company seems to be short on float. Hence it is easier to manoeuvre the share price by traders.

Catcha Media is a company which has not shown any strong potential. Its drop in revenue as well as registering losses despite its expectation of doing much better after its listing really disappoints. Over the last year, after its listing it has gone on acquisition (Haute Avenue) and exercise (iCar listing in Australia) to boost up its revenue and future. Those are exercises, but not something of substance as yet.

If it is claiming its foray of having a regional car web portal will succeed - that I have yet to be assured of. It is not that there are no automotive portal. Jobstreet acquired Autoworld.com.my years ago. For a company which has much cashflow than Catcha and already has proven ability in terms of building a dotcom business is not able to turn the business into something worthwhile. The most followed blog / portal for cars in Malaysia is www.paultan.org. I do not see Paul Tan making much despite he is very much widely followed. (I respect his ability to pull crowd though - it's not easy)

Success in Malaysia does not mean success in any other parts of South East Asia. Jobstreet is largest in Malaysia and Philippines. JobsDB is most successful in Singapore, Thailand and Hong Kong. Seek.com is largest in Australia.

I do not see an online portal on high end fashion been able to prove successful in any parts of the world. How is Haute Avenue being foreseen to be so?

For now based on the below financials as at half year 2012, it is showing more pain than gain. Its cashflow does not seem good as well with less than RM3 million cash remaining. Its listing in Australia for iCar may have raised it some cash for the South East Asian portal but making it successful is different from convincing investors to put in cash.

My question is, how is the analysis by the investment bank going to be prove us otherwise?

The only one substantial is iProperty.com which to some extent increased its presence nicely. However, if you look at the expenses, it has much revenue from other sources which is event management. Hence iProperty made much from event management as well as online services (although its Annual Report does not tell us anything). And in fact, iProperty still loses money despite it trying to expand at a vigorous speed.

Just in case you are interested, below is the Proforma Income Statement for iCar which is expected to be listed in Australia.


Bn911 said...

Great analysis. I thought online business is great and with genting director also joining, luckily i din buy last time, if nt,cry alr now.

jack-max said...
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jack-max said...
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keano said...

Great analysis. I was about to think that Catcha is a good company until I read your throughout analysis. Totally concur!