My Thoughts on Vobile Part 2 (XIRR Update)

 

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Vobile Emmy win

Vobile share price went up 18.8% today. On March 7, Vobile Group (HK:3738), issued a profit alert. So how to interpret the performance forecast and what signals can we infer from this announcement? For those who have not read my first post on Vobile can click here. Full profit alert announcement here.

According to the announcement, Vobile Group expects a net profit of approximately US$10 million to US$12 million in 2020. Compared with a net loss of 6 million U.S. dollars in 2019, the company's net profit in 2020 has increased by 16 to 18 million U.S. dollars.

In contrast, most Hong Kong stock SaaS companies, including Weimob and Youzan, are still at a loss. It is not easy for Vobile Group to achieve profitability. However, considering that Vobile Group is actively expanding its business, the company is still in a period of rapid development, and its income growth at this stage has more investment reference value. Do note that Vobile is also one of the most internationalized Saas company in China.

It is worth noting that Vobile Group's revenue is ushering in good growth. The company expects that its SaaS business in 2020 will increase by 152% year-on-year. According to the currently available information, the company expects that the significant increase in net profit is mainly due to the steady increase in copyright protection business income while the substantial increase in content management monetization business income. The SaaS business recurring total for the year ended December 31, 2020 Revenue is approximately 252% of the same period in 2019.

The revenue of Vobile Group in 2019 was US$18.78 million. According to the estimated growth rate of the performance forecast, the revenue of Vobile Group in 2020 is expected to be approximately US$47 million. Since 2020, Vobile Group has not only accelerated the expansion of the global market, but also has frequently established business in China. It has successively established cooperation with Wasu Media, Ant Group, Shengguang Group, etc and recent announcements have also shown that it has successfully expanded the Rights ID business in Japan. The company's performance growth momentum is sufficient.

According to the company, Vobile Group continues to expand its copyright protection and content management monetization business globally, and is using blockchain technology to build a copyright issuance and transaction platform, thereby driving the Group’s SaaS business recurring total revenue to maintain a high speed growth in the foreseeable future.

In this context, Vobile Group can maintain high growth in the foreseeable future. Assuming that Vobile Group's SaaS business maintains a year-on-year growth rate of 150%, the company's revenue in 2021 is expected to be close to 120 million US dollars. To be conservative, assuming that Vobile Group’s SaaS business achieves 100% year-on-year growth this year, the company’s revenue in 2021 will exceed US$90 million. The company 2021 result guidance was also about $100 million in revenue.

Vobile team photo

As of today, the total market value of Vobile Group is approximately HK$12.93 billion, or approximately US$1.68 billion. According to Vobile Group’s SaaS business in 2021 to achieve a revenue of 100 million US dollars, the company’s PS in 2021 will be approximately 16.8 times, and the valuation has an advantage.

In addition to the predictable growth brought about by existing businesses, the copyright issuance and trading platform constructed by Vobile Group using blockchain technology is expected to bring broader growth prospects. Since the Ant Group strategically invested in Vobile Group in December last year, the company announced that it will cooperate with AntChain to build a global copyright issuance and trading platform, thus entering a new 3.0 era.

Recently, some digital art(NFT) sales have received widespread attention. As the value of digital assets is recognized by more and more investors, the popularity of digital asset transactions is gradually rising, and the value of Vobile Group's 3.0 business will begun to be highlighted. It is expected to lead the company to a more imaginative sea of ​​stars in the future.

Recently, due to the rise in US bond yields, the overall Hong Kong stock market has experienced a certain correction, and Vobile Group has also been affected to a certain extent. However, short-term fluctuations do not change long-term value, and good companies deserve long-term attention.

Vobile Group’s forecast of performance beyond expectations further proves that the company’s fundamentals are supportive. The company is not only the first to achieve profitability, but also expects to achieve a high growth of 152% in revenue. As the company is continuing to develop international and domestic businesses, the certainty of maintaining high revenue growth is relatively high. According to the estimated revenue of 100 million US dollars in 2021, the company's current valuation has an advantage. 

Full disclosure, I have vested interest in this stock and I'm currently up 19.01%

Snap shot of my portfolio performance as of today: Total profit for 2021: S$58,404.85


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