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Hi everyone, just some back of the envelope calculations and work.
Company has crashed since IPO this year due to COVID. The product they sell is an online map with audio guides. Imagine booking a tour to a scenic spot eg. Great wall of China and just topping up a dollar more for a map of the place which can track your location as you walk around, can provide explanations to you and show where the amenities/food/toilets are for an additional US$1.
Long Case:
1. Long runway as domestic tourism in China will continue to grow with and after COVID. Highly likely that Tourism will continue to be promoted to boost economy. China is a very big country with many scenic spots so there is still room for growth.
2. Strong Balance Sheet with little debt, recently IPOed, business has been profitable in past years. (US$95M, if revenues go back to 2019 levels, company will be selling for PE <3)
3. CEO owns almost 30% of company. (Directors salaries are considerably low for past years which could imply shareholder orientation and money being plowed back to business)
4. China Investment Corp (China's sovereign wealth fund) is a significant shareholder. (Could help them in getting contracts with governments)
5. Market Leader (With more cash, company can now invest more in developing new maps and maybe an acquisition and increase their market share. They are currently the market leader according to the Frost & Sullivan report)
6. Little competition (closest competitor is SanMaoYou which focuses more on education museums, maps are not as high quality as LVJI. Other tour guide apps don't have the profitability, scale and quality of LVJI maps)
Short Case:
1. New competitors could decide to enter the Smart Tourism market themselves e.g Tencent. (However note that currently have a partnership with them, check out the Tencent "One Yunnan Tour" app for more info)
2. Dependent on OTAs (Company has signed exclusive agreements with them, OTAs will want to continue this partnership to boost revenues from COVID fallout, profits are shared around 50:50)
3. COO and CFO don't own any shares (However, they are paid more in remuneration than the CEO)
4. Numbers could be faked, auditor is Ernst & Young which is also the auditor of Luckin and Wirecard
(CEO seems like a legit guy from interviews and videos, could not find any negative employee/company reviews)
For more info, do read their prospectus especially the "Business" segment. (https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0117/9131203/sehk19122900102.pdf)
Some pictures of the maps: https://mobile.zcool.com.cn/work/ZMjE4NTk5NDA=.html
There have also been better write-ups by others here:
https://jaygao.medium.com/seriously-unde...92709eaf1d
https://alexeliasson.substack.com/p/lvji...ation-tech
Feel free to push back on the thesis or on anything I'm missing.
Thanks for reading
Company has crashed since IPO this year due to COVID. The product they sell is an online map with audio guides. Imagine booking a tour to a scenic spot eg. Great wall of China and just topping up a dollar more for a map of the place which can track your location as you walk around, can provide explanations to you and show where the amenities/food/toilets are for an additional US$1.
Long Case:
1. Long runway as domestic tourism in China will continue to grow with and after COVID. Highly likely that Tourism will continue to be promoted to boost economy. China is a very big country with many scenic spots so there is still room for growth.
2. Strong Balance Sheet with little debt, recently IPOed, business has been profitable in past years. (US$95M, if revenues go back to 2019 levels, company will be selling for PE <3)
3. CEO owns almost 30% of company. (Directors salaries are considerably low for past years which could imply shareholder orientation and money being plowed back to business)
4. China Investment Corp (China's sovereign wealth fund) is a significant shareholder. (Could help them in getting contracts with governments)
5. Market Leader (With more cash, company can now invest more in developing new maps and maybe an acquisition and increase their market share. They are currently the market leader according to the Frost & Sullivan report)
6. Little competition (closest competitor is SanMaoYou which focuses more on education museums, maps are not as high quality as LVJI. Other tour guide apps don't have the profitability, scale and quality of LVJI maps)
Short Case:
1. New competitors could decide to enter the Smart Tourism market themselves e.g Tencent. (However note that currently have a partnership with them, check out the Tencent "One Yunnan Tour" app for more info)
2. Dependent on OTAs (Company has signed exclusive agreements with them, OTAs will want to continue this partnership to boost revenues from COVID fallout, profits are shared around 50:50)
3. COO and CFO don't own any shares (However, they are paid more in remuneration than the CEO)
4. Numbers could be faked, auditor is Ernst & Young which is also the auditor of Luckin and Wirecard
(CEO seems like a legit guy from interviews and videos, could not find any negative employee/company reviews)For more info, do read their prospectus especially the "Business" segment. (https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0117/9131203/sehk19122900102.pdf)
Some pictures of the maps: https://mobile.zcool.com.cn/work/ZMjE4NTk5NDA=.html
There have also been better write-ups by others here:
https://jaygao.medium.com/seriously-unde...92709eaf1d
https://alexeliasson.substack.com/p/lvji...ation-tech
Feel free to push back on the thesis or on anything I'm missing.
Thanks for reading