News blog
RedHot Media International Ltd
- BY: Andrew Hore |
- POSTED: 20/06/2012 |
Asia-focused media services provider RedHot Media International Ltd has produced further growth in revenues and profit while it waits for the Malaysian authorities to approve the reversal of the core media business into Malaysia-quoted PUC Founder.
In 2011, revenues rose by one-third to RM58.9m. They grew much faster than profit because RedHot was trying to build up the business. Newer business is lower margin. The fastest growth was in China where revenues grew 42% - China accounts for 44% of total revenues.
Pre-tax profit improved 13% to RM10.4m as overheads barely changed despite the rise in revenues. Forecasts for 2012 are under review.
Asian companies can tend to have poor cash flow and RedHot’s cash inflow in 2010 was a small fraction of the reported profit. This changed in 2011. Trade debtors did rise by RM5.8m and this was only partly offset by positive changes in inventory and creditors. Even so, there was a net cash inflow of RM9.3m in 2011, up from RM1.43m the previous year. Most of that cash went on deferred consideration payments.
Net cash fell to RM181,000 by the end of 2011. This does not include fixed deposits of £1.66m. There are provisions for further deferred consideration of RM10.1m and a redeemable preference shares liability of RM3.71m.
All these financials will change when the reversal of the media services activities into Founder is completed. This deal was announced in November 2010 and it will leave RedHot as a holding company with a near-68% stake in Founder. Management hopes that the deal will be completed this year and it will enable the business to grow faster in China. It will also be able to make acquisitions which have been delayed due to the slow progress of the approval of the deal.
RedHot will then become a holding company.
RedHot is still finalising an agreement for a £20m equity line facility with Dutchess Opportunity Cayman Fund. This cash could be drawn down in minimum tranches of at least £200,000. The shares would be issued to Dutchess at a 10% discount to the weighted average price in the previous 20 trading days. This cash would go to RedHot itself and would be used to expand operations outside of the Founder deal.
RedHot has plans to grow its Ausscar financial services business, which generated revenues of RM1.88m in 2011.
Plans have been announced for a one-for-10 bonus share issue and another one-for-five bonus share issue will happen before the end of 2012. Management hopes that this will improve the liquidity of the shares.
Liquidity is already a lot better than one year ago. In May 2011, there were hardly any shares traded. Trading then started to pick up and it jumped to 8.12% of average market capitalisation in October 2011 and there was an upward trend from then on. In May 2012, shares equivalent to 19.4% of the average market capitalisation were traded.
Around £100,000 worth of shares were traded following the results announcement.
At 34p a share, RedHot is valued at £12.7m. The shares are trading on six times 2011 earnings.
Download the latest AIM Journal from http://www.hubinvest.com/AIMPDFJune2012_33.pdf
© 2024 Aim Micro. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
- Browse by issue
- All issues
- Popular tags
- All tags
- AIM Micro feeds
Keep up to date with articles published at AIMMicro.com. Subscribe to AIM Micro RSS Feeds
|