Wednesday, September 11, 2013

Key Takeaways from Tiger Media’s Earnings Call -- IDI $IDI

I first wrote about Tiger Media (IDI) back in July after meeting management in Shanghai.

At the time, Tiger was trading at $0.90. It recently reached a 52-high of $1.89.

This week Tiger reported earnings, held an earnings call, and presented at the China Best Ideas Investment Conference in Beijing.

While revenue for 1H 2013 was negligible July and August were another story altogether.

During the subsequent earnings call CEO Tan very clearly articulated Tiger’s increased traction in Shanghai, strategic plans for other Tier I, II, and III Chinese cities, and a major mobile online-to-offline initiative expected later this year.

Threshold Capital portfolio manager Peter Delgado II summed up Tiger’s latest results in a September 9th letter to investors:
Tiger Media just reported financial results for the eight (8) months ended August 31, 2013 – progress and execution has been spectacular!  
The Company generated negligible revenues for the first half of 2013, but in the months of July and August, the Company took in revenues of $2.1 million.
Tiger Media will complete the rollout and installation of its Shanghai luxury mall concession this month and they have attracted top tier global Clients including McDonald’s, Pepsi-Cola, BMW, and LVMH’s Benefit cosmetics line. 
Tiger Media will now begin to rollout other Luxury Mall advertising networks in other Tier 1 cities, specifically Beijing and Guangzhou.
Also, and the most exciting news, Tiger Media announced its initiative to enter the mobile space with their advertising network in Shanghai (and other cities when complete) and this new revenue stream will catapult the Company to greater profitability.
This entry by Tiger Media into mobile is similar to what Facebook is doing here in the US.  This opportunity is tremendous… 
Delgado is clearly excited about Tiger’s prospects…and for good reason.

Just look at what Tiger's CEO Tan said on various topics during yesterday’s earnings call:

Shanghai LCD Screen Utilization
“the utilization for this $2.1 million (revenue) is actually having 10% to 20% of the screen time only. There is a long way to go.”
LCD Roll-Out Schedule
“Beijing and (Guangzhou)-- important cities for us. We will like to develop the network over there. Two other cities...would be Chongqing & Chengdu.“
Mobile Online to Offline Initiative
“LCD screens…they will become interactive so consumers will not only be seeing advertisement on our screen but they can interact with our advertisers online to acquire product information and for better consumer benefits like promotions or product discount.  
Advertisers in return can get spontaneous market intelligence such as consumer preference and purchasing habit. 
the screens are interactive enabled. So it's ready…such technologies are not new.
we are well-positioned because we are at the closest point of sale...with the malls... location based advertising method… 
potentially we are turning each mobile phone into a screen for us. So instead of a 115 screens, we have many-many screen out there.” 
Revenue Opportunity of Online-to-Offline 
“if its successfully executed, I think you will see huge multiples in revenue growth as a result of that…”
Timing of Online-to-Offline 
“We hope that it will be a 2013 event.”
Raising Capital
“There would not be requirement to raise any new funds for the company. “
Home Inns (HMIN) Partnership
“I think we've put Home Inns a little bit to the backburner, but we are still developing that concession, but we will develop the indoor part of it first.”
Transparency and Reporting
“And I think going forward it is my endeavor to ensure that we keep all investors completely abreast of the development of this company. And that the filing, the reporting and the financials were delivered on a timely basis.” 

We’re starting to see the promise of Tiger Media.

Revenue is beginning to ramp.

The company generated that revenue in a short time while only utilizing a small portion of its network.

And while CEO Tan cautioned not to project revenue based on results from July and August you can see the trajectory. Shanghai is gaining traction, other Tier 1 city networks are on the way, and soon enough Tiger will have a substantial business even without contributions from the mobile initiative and Home Inns (HMIN) partnership.

More important, the mobile piece could be a game-changer. The technology already exists and the company expects to roll it out later this year. The margins on this initiative will no doubt be sky high.

Finally, with CEO Tan’s stated commitment to improved transparency and timely reporting new investors will come.

Looks to me like the Tiger Media story is just beginning to play out.

Disclosure: Long Tiger Media (IDI)

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