Following on from the cancellation of the shareholder share offer on 29 June, IPP has made a number of media releases. The cancellation, although disappointing to shareholders who had already sent in their money, is probably understandable. If the company thought $1.00 was a bit discounted to get the institutional and large shareholders in, then they would have been reluctant to see us smaller shareholders getting them for around $0.85. They had already raised $10m from the private placement and the $1m of shares offered to smaller shareholders was not going to make a huge difference to the capital raising. As it has panned out, smaller shareholders have had the opportunity to buy substantial volume in the range $0.85 to $0.95. I wonder who the seller has been.
The announcements that have followed have been a bit light on in detail
Tha announcement on 9 July about China Central Television looks positive. From what I understand, IPP will pay CCTV a certain amount per annum to allow IPPs clients to be seen on CCTVs website. On this extra exposure, IPP will be able to add an extra charge to their advertisers. What this means in revenue terms remains to be seen.
The announcement of 24 July supports Ponzi's post re expect a growth forecast revision, in that most of us would have been hoping for a break even situation in 2012. It will depend on how they account for recent abnormal items and purchases, and 2nd half performance, but at this stage it looks like 2013 might be the year.
The claim that IPP has "established leadership positions in core markets of Malaysia, Hong Kong, Indonesia and Singapore" needs to be treated warily. They have certainly done so in Malaysia and Hong Kong, but as I understand it, Singapore is a bit of a dog fight to the end and clear leadership is still up for grabs. Indonesia is such a nascent market, it is probably too early to claim victory. However IPP are pumping the resources into this area and the announcement of 26 July gives positive feedback. Also the concentration on apps as the means of access to their site ensures that many Asian residents, who might never own a computer, will have access thru their smart phones.
The most positive message imo is the 27 July Q2 4C report which shows that revenue is still growing at a similar rate of recent years of around 50% per annum. If that can be maintained for the next 18 months we will have around $18 in 2012 and $27m in 2013. Expense growth however is a worry and needs to taper off. At this stage it is difficult to keep tabs on what are recurring expenses and what are one off. Also, if acquisitions keep occurring, this will keep pushing expenses up.
In summary, I think we still have a great emerging company here, in the right place, in the right industry, and taking advantage of the paradigm shift of real estate advertising from paper to the internet.
IPP Price at posting:
91.0¢ Sentiment: None Disclosure: Held
