Free polls from
Should we set a cap on bankers' salaries to prevent future crisis?
Yes! Get the bastards! No! They deserve every penny!   

Tuesday, September 06, 2005

Mediaring @ 22.5 cts ( Internet / Singapore ) 7 comments

(P.S: Sorry for any disturbances the advertisements above may have caused you)

Main issues

1.Limited profit track record; growth could be hobbled by disproportionate growth in direct service fees and marketing expenses

2.Difficult to see what differentiates it from peer service providers

3.Tendency for hype in the sector

What a difference black ink and some attention makes. Mediaring, of course, has been a hot stock these few days; after languishing at 14-15 cents with no buying interest for several months, it rose to as high as 24 cents these few days, a >50% price rise, on the back of its interim profit (after several years of losses) and probably more importantly, a placement of new shares to a reputed investor group (Newsmith) albeit at the rather low price of 16 cents.

Mediaring sees itself as one of the largest pure play VoIP, or internet telephony, outside of the US, and I am not about to dispute this claim. Likely this is on the basis of revenue, which is made through selling the VoIP services online and also the associated peripherals (PC phone). Indeed, its revenue has been growing at a 50-100% clip these last 3-4 years; this is not a new phenomenon. Yet the company has only just turned profitable this half-year; surely that says something about the viability of the business? Indeed, an examination of the P&L for 1H05 sees revenue growth of ~90% accompanied by a more than proportionate increase in sales/marketing expenses of ~160% and direct services fees of ~70%; these two components constitute its main costs, and suck up most of the revenue such that pre-tax profit margin is only 1-2%. Direct service fee expenses are likely to grow proportionately with revenue; they are payments to the Internet infrastructure providers. As for sales and marketing expenses, it has been increasing more than proportionately in relation to revenue growth these few years; a look-through of the annual statements from 2003 onwards showed that sales/marketing expenses had doubled every year!!

VoIP is probably a more usable service today compared to say, during the 2000 dot-com boom period, given improved Internet penetration rates and the advent of broadband. However, my doubts about this Internet sector remain; firstly I cannot see what distinguishes Mediaring's VoIP service from other VoIP providers, some of which are free (eg. Skype), and that is despite the high sales/marketing expenses. Secondly, there is no shortage of cheap substitutes for VoIP; I have been using pre-paid Phoenix phone cards to call fixed lines in Shanghai and for a S$10 calling card I get 250 minutes of calltime; that's about 4 Singapore cents a minute. How much does Mediaring charge for the similar destination? 5 US cents a minute. Where's the cost competitiveness of VoIP? And mind you, the voice quality of these pre-paid international calling cards' phone service is excellent too.

I shall not talk about PE at this point because it is ridiculously high and probably meaningless. It would be fair to say that revenue growth in 2H05 would still probably be strong but profit should be the one investors should concentrate on. Hey, we have already had the lesson of one dot-com crash, surely we don't need another one? Mediaring is certainly a dot-com company in spirit; just look at its management review of operations: "The Group's call traffic rose 55% to 474 million minutes in 1H 2005 from 205 million minutes in 1H 2004. The Group generated more than 80 million minutes of call traffic a month since March 2005." Gee, this sounds like a pitch by a typical dot-com during 1999-2000: the focus on revenue, the emphasis on large orders of magnitude (millions of units); you can just swap the term "minutes" for "eyeballs".




Anonymous Anonymous said...

Well, it is always a tough in investing. Most people want to believe the easy way out.

I was once from Shareinvestor. Remember the hype forumner had for TAC. And the bluntness that people used to talk about Sembcorp.

But time tell. Sembcorp after a year rose about 100% whereas TAC hover at the same price.


9/07/2005 10:45 AM  
Anonymous Cheras said...

maybe a good counter for short term trader, definately not for fundamental investors!

9/09/2005 11:12 AM  
Blogger DanielXX said...

So Mediaring has breached the 30-cent barrier. Small cap stocks are in vogue now. I'm surprised because the mainstream tech stocks are faltering.

9/20/2005 9:55 PM  
Blogger Mike said...

Well Daniel,

Singapore market is just a playground. The link ones will get all the latest news of what going to be in play.

As for me, a small fish, I would rather buy a good stock and keep for long. At this moment, not much to choose.

As they said, buy on weakness and sell when peak.

If all are not moving up, then it has to come down.

9/30/2005 8:59 PM  
Blogger DanielXX said...

There are good stocks around selling at good valuations if you care to look. For one, look at the tech stocks which have been hit by high oil prices. You might just find a gem or two there.

10/02/2005 10:07 AM  
Blogger delight-fully said...

Irresistible blog. I look for blogs like this one
when time allows me to. I enjoyed the site and I'll
check it next time!
I want you to stop and compare with my blog.

10/04/2005 1:02 AM  
Blogger ooopzz said...

Fruitful blog. I favor your site and I shall
return to it! I go to sites like this when I get the
chance, and find blog just like this.
Want to see top notch work, peep my kenneth cole
|kenneth cole watch
|kenneth cole shoes
|kenneth cole reaction
|black black cole jacket kenneth l leather man reaction s white
|kenneth cole reaction shoes
|kenneth cole handbag
|kenneth cole luggage
|kenneth cole outlet
|kenneth cole man watch
|kenneth cole briefcase
|kenneth cole man shoes
|kenneth cole bag
|kenneth cole boot
|kenneth cole new york
|kenneth cole sun glasses
|kenneth cole black
|kenneth cole reaction luggage
|kenneth cole sandal
|kenneth cole messenger bag
|kenneth cole jewelry
|kenneth cole diaper bag
|kenneth cole purse
|kenneth cole suit
|kenneth cole wallet
|kenneth cole unlisted shoes
|kenneth cole unlisted
|reaction by kenneth cole
|kenneth cole womens shoes
|kenneth cole swim wear
|kenneth cole eye glasses
|kenneth cole cologne
|kenneth cole outlet store
|kenneth cole leather jacket
|kenneth cole reaction handbag
|kenneth cole eyewear
|kenneth cole sport coats
|kenneth cole reaction watch
|kenneth cole clothing
|kenneth cole kid
|kenneth cole reaction cologne
|kenneth cole store
|kenneth cole reaction womens shoes
|kenneth cole perfume
|kenneth cole reaction sandal
|discount kenneth cole watch
|kenneth cole computer bag
|kenneth cole shirt
|kenneth cole earring
|unlisted by kenneth cole
|kenneth cole coupon
|kenneth cole signature
|kenneth cole bridal shoes
|kenneth cole kid shoes
|kenneth cole lady watch
|kenneth cole bracelet
|kenneth cole leather
|kenneth cole glasses
|kenneth cole watch repair
|kenneth cole production
|kenneth cole reaction bag
|kenneth cole child shoes
|kenneth cole online
|kenneth cole man
|reaction shoes by kenneth cole
|kenneth cole tie
|kenneth cole jacket
|kenneth cole garment bag
|kenneth cole womens watch
|kenneth cole leather briefcase
|kenneth cole wedding shoes
|kenneth cole catalog
|discount prices kenneth cole luggage
|kenneth cole reaction boot
|kenneth cole coats
|kenneth cole pants
|kenneth cole watch band
|apple cedar cole kenneth reaction
|kenneth cole satchel
|kenneth cole dress shirt
|kenneth cole computer case
|briefcase cole kenneth reaction
|kenneth cole handbag leather
|kenneth cole reaction purse
|kenneth cole sandal man
|kenneth cole reaction kid
|kenneth cole laptop case
|discount kenneth cole shoes
|kenneth cole tote bag
|kenneth cole cuff link
|discount kenneth cole luggage
|kenneth cole jeans
|kenneth cole woman watch
|kenneth cole backpack outlet
|kenneth cole black cologne
|kenneth cole com
|kenneth cole dress shoes
|kenneth cole belt
|kenneth cole reaction messenger bag
|kenneth cole woman shoes
blog site for the bomb work!

10/05/2005 4:42 AM  

Post a Comment

<< Home