Vividthree IPO: Here are 5 Key Things You Should Know
- Original Post from Smallcapasia

Vividthree Holdings can trace its history back to 2006, where they started out as a visual effects studio. Today, they are involved in creating content for the various platform by leveraging on the virtual reality (VR) technology.


In addition to that, they also provide Post-production services, mainly in visual effects, computer-generated imagery, and other post-production related work.


The company was previously owned by mm2 Asia with a 51% stake. Last month, Vividthree entered into a restructuring agreement to spin-off from its parent company - $MM2 Asia(1B0.SI) and to be listed on the Catalist board.


Its 'brother' listing is $UnUsUaL(1D1.SI). You can find the prospectus here.


1. Vividthree Holdings Limited IPO Details


The IPO will close at 12pm on 20 September 2018 (Thursday) and expected to commence trading on 25 September 2018 (Tuesday).


The company is placing 51.8 million new shares at a price of S$0.25 a piece during the IPO period. The total number of issued share in the company immediately after the placement will be 334,011,764 shares.


Unfortunately, the IPO is not made available to the public and its prospectus did not provide any information about the cornerstone investors.


That said, Mr Long Jong, Non-Executive Director & Mr Ang Wee Gee, the brother of Mr Melvin Ang intend to subscribe for 200,000 and 1,200,000 placement shares.Fyi, Mr Melvin Ang is the executive chairman of mm2 Asia.


2. Vividthree’s Business Segments


The company comprises 2 main business segments, namely content production and post-production.


Post-Production


Under the segment, Vividthree provides their clients creative input and technical solution through a range of post-production services. The company is specialising in visual effects, computer-generated imagery services and other post-production services.


Here are some of the services that Vividthree provides, with subject to clients’ need:



  • Providing creative input, including working with producers, directors, scriptwriters and cinematographers to conceptualise and develop optimal live or camera shots for the visual effects

  • Script development and storyboarding

  • Selection of cast, crew and voice-over artistes


Content Production


Besides that, Vividthree owns a in-house content production business. In fact, this business segment was only started out in the beginning of FY2018 and since then, posted a larger revenue contribution to the company.


With the in-house content production business, the company are able to develop their own digital intellectual property assets or acquire them from third parties to produce virtual reality products such as thematic tour shows.


In March 2018, the company entered into a binding term sheet with Contents Panda to develop a virtual reality thematic tour show based on the film “Train to Busan”.


According to the management, they are one of the few companies in Asia with the capability to integrate engaging VR content with hardware devices and produce thematic tour show sets.



3. Use of Proceeds


Vividthree Holdings will raise a gross proceeds of S$12.95 million upon listing. Around S$1.77 million of the proceeds will go towards listing expenses, which is roughly equivalent to 13.67%.


Minus off the listing expenses, the company will ended up with S$11.18 million, in which S$7.8 million will be allocated for general working purposes while the other S$ 3.35 million are set aside for business expansion through acquisitions or joint ventures.



4. Financial Highlights


The company reported steady growth in revenue and net profit over the past 3 years. The revenue has increased from S$ 3.96 million in FY2016 to S$7.06 million in FY2018 at a compounded annual growth rate of 34%.


From the diagram below, we can see that the revenue contributed by Post-production segment for FY2018 has dropped to S$2.86 million from the peak of S$5.29 million in FY2017.


However, the declining revenue was offset by the content production segment, which contributed S$4.20 million to the company.


For the decline in revenue from post-production business, the management stated it was due to more emphasis being placed on content production, which provides a higher gross margin.



In tandem with the growth in top line, the net profit attributable to the equity holders recorded a growth of 39% compounded annually from S$1.41 million to S$2.71 million in the same period.



After assessing its balance sheet, Vividthree seems to be a cash-rich company. With a total debt of S$0.13 mil and a cash and cash equivalent of S$ 2.35 mil, the company is sitting on a net cash of S$2.228 mil in FY2018.



5. Future Prospects


With the advent of virtual reality to the public, the entertainment industry has been changed significantly in the past few years.


There also has been an increasing trend of immersive entertainment and media in the form of multi-sensory experience for individuals or groups at any physical location.


With the help of virtual reality technology, it is now possible for us to have inanimate objects appear animate in a three-dimensional space.


By tapping into the growth of virtual reality, the company aims to build up their own digital intellectual through additional development of virtual reality products and other immersive experience. These include thematic tour shows, educational materials and video games.


As of 17 August 2018, the company has an order book of approximately S$1.5 million, based on signed contracts, confirmed quotations and orders for ongoing projects.


Conclusion


With a market capitalization of S$83.5 million upon listing and a net profit of S$2.7 million in FY2018, this translates to a whopping historical PE of nearly 30 times!


Furthermore, the company do not plan to pay any dividends in the future to allocate their funds for future growth.


In a nutshell, Vividthree is not for the faint-hearted. Its high valuation is justified with its future growth plans to tap on the exponential growth in the VR industry and dynamic content production.



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3 Small Cap Stocks with Big Cap potential
- Original Post from Smallcapasia

Investors are always on the look out for the next double or triple baggers. What makes a company an imminent multi-bagger boils down to a few points.



  • For one, it must have a stable and visionary management.

  • Second it must have a solid plan to expand and increase its operations.

  • Third, it must possess a sound balance sheet.


All these amount to the growth potential of the company. We have scoured the SGX stock market and here are 3 small cap stocks that have an enormous budding opportunity ahead of them.


#1 Jumbo Group



The household name of Jumbo Group is a multi-dining concept food and beverage company.


Among its household names in Singapore includes Jumbo Seafood, J Pot, Ng Ah Sio Bak Kut Teh, etc. It also has operations in China, Taiwan, Thailand, Vietnam, South Korea and Japan.


As of the 3rd quarter 2019 report, Jumbo’s revenue dropped slightly by 0.4% to $113 million while net profits increased 0.5% to $8.35 million. That is by no means exciting but it has an exciting growth story in the pipeline.


Acknowledging that Singapore has a relatively smaller market size, the management team actually took its famous recipes abroad and secured many franchisees for various brands under its wing.


As an example, Jumbo has opened four Ng Ah Sio outlets in Taiwan, two Jumbo seafood in South Korea, etc. With the capable management team, Jumbo has the potential to grow to be a f&b powerhouse in Asia.


Moreover, it is a noteworthy point that Jumbo has no debt on its balance sheet. The operations are supported by the positive cash flow from its operations and $40 million it has in its cash balance.


Jumbo Group last closed at $0.385, which values it at a P/E of 22.4x and dividend yield of 3.2%.


#2 UnUsUaL Group



UnUsUaL Group (Unusual) is an established producer and promoter of large-scale live events and concerts in Singapore and in the region.


Its business can be broken down into 2 broad segments:



  1. Production business deals with providing support to the artiste’s team through set designs, stage designs, etc.

  2. Promotion business deals with planning and managing of concert and events.


As of its latest 2019 annual report, Unusual’s revenue increased by 16% to $56.9 million and its net profit increased by an astounding 31% to $13 million.


The company has a current ratio of 4.03x, and interest coverage ratio of more than 1,000. This shows the credit worthiness and solid balance sheet of the company.


Singapore has been a hot spot for idols such as JJ Lin, Andy Lau, and Westlife to hold their concert. This is mainly due to the increasing affluence of the city dwellers.


That said, UnUsUaL is not just contented with being in Singapore. The company has made its foray into China and also diversified into family-themed shows like the Disney-on-Ice, Walking with Dinosaurs and upcoming Apollo shows.


UnUsUaL Group last closed at $0.30, which values it at a 23.4x P/E ratio but pays no dividends.


#3 Powermatic Group



Powermatic Group was listed on SGX n 1992 and operates under two segments:



  • One, manufacturing sale of wireless connectivity products and related services.

  • Two, lease and maintenance of Harrison Industrial Building.


In its latest 2019 annual report, Powermatic’s revenue increased by 25% to $20 million and increased its net profits by a staggering 55% to $7 million.


Evidently, the company has an impressive 35% net profit margin, an admirable margin for a manufacturing company. Moreover, it has no borrowings and a cash balance of $35 million.


This company churns out more than enough free cash flow to cover for its expenses, which explains its pristine balance sheet.


Recently, Powermatic has just announced a positive profit alert for its half-year 2020 results. The significant increase in profit before tax from S$ 2.82 million in 1H FY2019 to S$ 5.89 million in 1H FY2020 was attributable to:

i) a 64 % surge in revenue;

ii) improvement in gross profit margin; and

iii) higher interest income from fixed deposits.


Furthermore, the Group’s 2nd production plant in Kulai, Malaysia is expected to start operation in the last quarter of the current financial year. Production capacity will be scaled up gradually in the next financial year.


Powermatic last closed $2.50, which values it at a P/B of 1.42x and gives it a dividend yield of 2%.


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$Jumbo(42R.SI) $UnUsUaL(1D1.SI) $Powermatic Data(BCY.SI)

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$MM2 Asia(1B0.SI)


New movie by them again

https://www.popcorn.app/sg/big-three-dragons/movie/11283


I like how Ella (from S.H.E. band) is one of them! Raising their profile slowly...

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Hi All, I am trying to do an analysis report on 1 company. Which one would you pick from the 5 below and why?
1) $Food Empire(F03.SI)
2) $Geo Energy Res(RE4.SI)
3) $MM2 Asia(1B0.SI)
4) $ChinaSunsine(QES.SI)
5) $SingMedical(5OT.SI)

I will share the free report once its done!

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