Summary of the report
Company overview
Mao Ji Kwai Chung started its business as a print media service provider, providing editorial advertising production and advertising delivery services, as well as printing media publishing services such as "Black Paper" magazine, "100 Mao" magazine and various subject books.
After the company began to publish creative content on the Maoji TV website and the fan pages of "100 Mao" and "Maoji TV", one of the most popular third-party social media platforms in Hong Kong, the audience base has been expanded. as a result, the company's integrated advertising and media services have emerged as a new force and have a wider range of advertising and distribution channels.
The company's FY2015-17 revenue / net profit CAGR reached 99.3% Universe 115.4% respectively. Revenue in the first eight months of the company's FY2017 fell 27.3 per cent year-on-year to HK $55.32 million, while net profit fell 84.2 per cent to HK $5.167 million.
Industry status and prospects
The structure of the online advertising industry in Hong Kong is relatively scattered.
It is expected that consumers will get more data and entertainment content through different mobile devices in the future.
The number of active magazine publishing companies in Hong Kong showed a downward trend in 2011-16, with CAGR about 3.7%.
Advantages and opportunities
The company's reputable brands in the advertising and media industries attract customers for advertising and media services.
To meet the diversified advertising needs of customers through the provision of integrated advertising and media services.
Experienced management team and creative and responsive executive team.
Weakness and risk
Social media platform usage is declining.
The company's business is extremely vulnerable to changes in audience preferences.
The company has failed to adapt to the technological development of the advertising and media industry.
Valuation
Based on the company's average FY2015-17 net profit of HK $22.16 million and the company's share price range of HK $1.00-1.20, we estimate that the price-to-earnings ratio is about 12.2-14.6 times earnings. Considering that I) the industry is highly competitive and decentralized, ii) the creative media business is uncertain, and iii) the valuation is not cheap, we give IPO a dedicated rating of 5.