1010 Printing - David Webb buys 5% stake

David Webb disclosed he bought 5% of 1010 Printing (1127.HK) on Friday after market close.

He has a reputation as a smart value investor so I thought I would take a look at this company :

They are one of China's leading book publishers.

Market cap is HKD770m, and P/E is 6.3x.

Turnover last year grew 66% and profit grew by 84%, so it looks like the growth is priced very cheaply at the moment.

They publish a company newsletter with details of volume of books shipped, and this year looks like it is even better than last year. (See chart at the bottom) :

http://snipurl.com/28uopp9

Has anyone else looked at this ?

(27-04-2014, 11:05 AM)JJ517 Wrote: David Webb disclosed he bought 5% of 1010 Printing (1127.HK) on Friday after market close.

He has a reputation as a smart value investor so I thought I would take a look at this company :

They are one of China's leading book publishers.

Market cap is HKD770m, and P/E is 6.3x.

Turnover last year grew 66% and profit grew by 84%, so it looks like the growth is priced very cheaply at the moment.

They publish a company newsletter with details of volume of books shipped, and this year looks like it is even better than last year. (See chart at the bottom) :

http://snipurl.com/28uopp9

Has anyone else looked at this ?

Welcome to valuebuddies JJ.

1010 isn't a book publisher. Its business revolves around providing printing services to international publishers.
http://www.1010printing.com/OurCompany/eng/company.aspx

Page 78 of AR13 states that if the acquisition occurred on 1 January 2012, the Group’s revenue and profit after income tax would have been HK$1,181,826,000 and HK$105,470,000 respectively for the year ended 31 December 2012. Normalising the revenue and PAT with 2013's figures(HK$ 1,163,542,000 and HK$ 121,421,000), i calculated a 1.5% fall in revenue and 15% increase in PAT y-o-y.

So we can see that top line growth have not grown but in fact fallen from 2012. The increase in PAT is largely due to better GPM which probably is due to the cheaper pulp prices. With pulp prices on the rise this year, i am uncertain if they can continue to increase their GPM.

ROA and ROE stands at 14% and 22% respectively. Pretty impressive. Company has close to zero LT debt, just HK$ 967,000 in deferred tax liabilities.

I think one risk investing in this company will be the closure of book publishers and retailers, which looks like a sunset industry to me as i see ebooks/elearning on the rise. 1010 may need to impair their receivables if that is the case. I am also uncertain if the company has any moat that will protect itself against other printing companies.

By the way, were you invested before they did the rights issue in 2013? i was wondering about the subscription price at HK$ 0.50 when the NAV was HK$ 0.90.
http://www.1010printing.com/pdf/investor...pectus.pdf

(not vested)