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Reflections of a Young Listed Company Chairman

Updated: Aug 3, 2018

The following content was first published on Ken‘s personal Facebook profile on 29 July 2017.

He was sharing his reflections as a Chairman of a young listed company.


This weekend is a welcome mini-break especially after completing a 3-week intensive reservist, chairing 8I Holdings Limited (8IH) AGM and attending Digimatic Group Ltd (DMC) AGM on a back to back schedule.


Hence, I can take this time and reflect deeply on issues especially as an Entrepreneur, Value Investor and as a Human Being.


3 main reflections;


1. Be Careful Not to Live on others’ Expectations Because It Can Crush Me If I Cannot Manage It Well.


During 8IH AGM, Ming Li (our Head of Private Investment) was chatting with one shareholder:-

Shareholder: I want 8I Holdings to have a solid revenue, stable earnings growth and can consistently pay out high dividend.

Ming Li: This sounds like some government-linked listed companies that have been listed for at least 10 – 15 years. But you are aware that 8I is only less than 9 years old and we are listed for only about 2.5 years?

Shareholder: Oh yah. In that case, the company has achieved quite a lot already. Come to think about it, not bad after all.


P/S: 8IH compounded annualized growth rate for revenue & other income, net earning and net total asset (last 5 years) are +83%, +139% and +85% respectively since FY 2012.


When Ming Li shared this conversation with me, I was lost for words. In fact, I was stunned. I started to ask myself “Am I living on too many people’s expectations? And some might be too unrealistic no matter how hard my team and I work on it.”


When I related this story to my dear brother and father in-law (who were both in town to attend the 8IH AGM), they laughed and said, “It’s the same like watching a football match. All sideline speculators will jeer, comment and criticize how the players should run, pass and shoot the ball as if they are the professionals. Well if they are really that good, ask them to go into the pitch lah!”


So what did I learn?

I have a deeper distinction not to live on others’ expectations because it can crush me if I cannot manage it well. It is important to live a purposeful driven life, be focused on the mission and stay on course regardless of the noises out there.



2. Reality is Seeing It Twice; First time in your mind, second time with your eyes


When I first met Ivan Ong (the founder of CPA Academy and later restructured to Digimatic Group, DMC for short) for lunch at Crystal Jade, Vivo City a few years back, I was surprised that we have similar background – both army officer, humble family, lack of interest in academic pursuit etc. Most importantly, he speaks a language that I can understand very well – street-smart entrepreneurship.


Before meeting him, I have heard of this name “Ivan Ong” from many of my Brand Mastery students/mentees when I was conducting the program from 2009 to 2013. I remember Yi Fong and Vincent were sharing that they have a “genius” friend from NTU who love to hide in his hostel and “play” the computer whole day long during university days, often skipping lectures and tutorials. And this guy bought his own car, property at a relative young age because he was dabbling in Internet Marketing stuff.


We spoke for 2.5 hours during lunch.

I barely touched my food because I was intrigued by the digital marketing knowledge that he knew, which were generating massive results. I respected this young gentleman and his proven results. I believed the feeling was mutual because shortly after, I decided to invest in CPA (which I thought was synergistic with our Education business).


Back in 2014, their revenue was $1.9m, with a net profit of $500k.

There were $700k cash in the bank with unearned revenue too.

No debt and no cash burn.

Their revenue and net profit doubled from 2013.

More importantly, they have a small user/lead database of 5000.


During and after the acquisition, I naturally became Ivan’s business mentor as I wanted my subsidiary to grow. After many tea sessions, I began to understand his business model more and more. Many people thought that CPA Academy is just a training or event organizing business (I initially thought it was too!) but the hidden growth potential is a performance based advertising traffic technology platform in the eco-system too. In fact, I can imagine that his business is much bigger than he initially thought because all metrics and trends are pointing to an explosion growth of performance based advertising and marketing in the world especially in South East Asia where there are 600 million of growing population market, democratization access of technology and growing pool of home based content creators and internet marketers. My memory of Singtel buying into Amobee, a digital advertising technology platform for US$321m despite the business was making US$10m – US$20m losses (quarterly) in March 2012 tell me that the growth potential is huge.


Ivan’s business requires restructuring, capital injection, merger, acquisition and building a bigger dynamic team with aligned culture. I can see the massive growth potential in my mind. Conclusion: this is not just an education business, it is a tech business. And speed is one of the key essence because this industry evolves pretty fast.


12 months later in FY 2015 when they IPO (with a clear technology platform direction for performance based advertising and marketing),

  • revenue increased by 211% to $5.9m

  • net profit increased by 54% to $720K

  • no debt and no cash burn

  • Database has grown by 700% to 40,000.


36 months later in FY 2017, less than 2 years after they IPO,

  • revenue increased by 700% to $15.2m

  • net profit increased by 138% to $1.11m

  • still no debt and no cash burn

  • Database has increased by 3,300% to 170,000!

  • 1,500 advertising affiliates with 1 billion ads impression served and 900,000 conversions (with an average earning of $5 per conversion)


If you are confused, read page 25 to 31 on http://www.asx.com.au/asxpdf/20170728/pdf/43kyrgyrgs7j2m.pdf


I knew I bought CPA undervalued at $1.53m (51%) for a valuation of $3m.

In fact, without a close mentor and mentee relationship, trust and assurance that 8IH is here to support CPA to grow, Ivan can well negotiate for a $11m valuation easily just on the education portion alone.

On hindsight, it was massively undervalued from business performance perspective.

Even at their IPO stage of 23x Price to Sales Multiple, I considered it cheaper than most of the Singapore, Malaysia and Australian ASX listed ad tech related companies back in 2014. Why? Simple, because many are in cash burn model with massive losses plus debts and yet commanding 21x to 212x Price to Sales multiple in 2014 and 2015.


P/S: To validate this point further, ASX listed iProperty.com was sold to REA Group for a total A$750m valuation on an A$20m revenue and A$2m loss, commanding a Price to Sales multiple of > 28x (based on last 12 month revenue) in Nov 2015.

(Refer to Page 6 & 7 to see how DMC business performance as compared to their ASX ad tech peers via http://www.asx.com.au/asxpdf/20170728/pdf/43kyrgyrgs7j2m.pdf)


Today, DMC is only 2.3x Price to Sales at their current market capitalization. This is the awe of a super fast grower.

This is the power of technology which something I am still learning and accepting because I am trained in the old mindset of running a brick and mortar business.

Technology growth is usually non-linear.

One can sit in Singapore office and serve customers all over the world.

Something which brick and mortar business can never achieve.


Hence, I would like to apologize to FB, Google and WhatsApp and many other technology companies because I used to mock at their valuation.


I was using an old business mindset to see a new fast changing industrial 4.0 world.

Now I am not even surprised when OFO, a 2.5 years old company is valued at US$3B. Barely 4 months ago, they were only valued at US$1B (200% jumped in valuation in less than 4 months). I believe their valuation has multiple folded every 2 to 3 months since 2015 till now which baffled many logical minds.


So what did I learn?

First, reality is seeing it twice; first time in your mind, second time with your eyes. Few can truly do it and that’s why only less than 5% of the population are entrepreneurs.

Second, it’s far better to open up my mind, eyes, ears and shut my mouth (and stop my finger for typing) to learn humbly especially when I do not know what I do not know. It is extremely unwise to use an old mindset and belief system to make/pass judgment on things that we are not familiar with.



3. Where is the Compassion for Fellow Human Being and Unity as a Nation?


I sat through DMC AGM listening to the shareholders firing questions after questions to the management team. All were valid and logical questions that deserved clarification.

When the board asked for the last question, I raised my hand,

“Ivan, how are you feeling physically and emotionally? I am happy to see you on the path of recovery especially after a severe spine surgery in March this year. I heard that Doctor gives you MC till end June but you came back to work in end April …”


My heart broke when I saw that none of the shareholders (maybe they are just not aware) showed any concern for their executive director, one of the key drivers of the business, doing his utmost best with his young team to create value for shareholders. Despite revenue has gone up more than 50% year on year, I understand that DMC share price is now less than ideal. So, the shareholders were anxious about the business fundamentals. But my heart broke when I saw Ivan enduring the pain (he had a spine injury a few months ago) to make a 45 min presentation and still doing his best to appease shareholders in physical pain.


My heart broke because I felt that we were becoming a soulless economic output machine. At that moment, I felt that empathy was all that Ivan needed.


While in reservist, I renewed and strengthened my faith in defending Singapore. In fact, my fellow officer mates laughed when I shared that I hope National Service will be made compulsory for females after 2030 (due to long persistent low fertility rate) so that my two beautiful daughters can make it in time for the first female NS cohort!


I shared with my entrepreneur friends that I usually prefer to hire local/PR first unless we really could not find the required niche skill set, such as data scientist. It is also my dream to support more fellow Singapore companies to grow, venture overseas and create more jobs and sustainable wealth for the local population. My team and I at 8I will continue to do so regardless how tough the path might be.


Why? Because I am a Singaporean.

My beloved wife and two beautiful daughters live here and we have no intention of moving anywhere at this phase of our life.


Hence, I wish and pray that my homeland is safe, progressive and prosperous.

Singapore as a small nation is really facing a serious challenge of a raising economic power in the East while continue to engage the West going forward for the next 50 years.

Thus, let us Singaporeans and Singapore companies stand united and work together to secure a better future for our children.

有国才有家。


Wishing you Great Health, Love and Abundance.

Happy 52th National Day in advance.

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Inspire someone positively today.


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