Bona Film Group Limited (BONA)
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Youku.com (YOKU) $154mm IPO
with a market cap of $1billion at the price range mid-point of $10
Scheduled for Wednesday, December 8, 2010 |
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SUMMARY |
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Wants to be the Youtube/Netflix of China. If YOKU can continue the revenue momentum then breakeven should be in sight, and then the stock will benefit. YOKU is rated by IPOdesktop as a B- & 8, a relatively high rating. |
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At the price range mid-point of $10, YOKU is valued at 15 times annualized revenue for the September 2010 quarter |
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Revenue was up 70% for three months ended September 2010, compared to the June 2010 quarter. Gross profit reached +14% -- the first quarterly positive gross profit for YOKU. However, September quarter’s operating margin was –34% |
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COMPARE |
IPO Mrkt |
Price / |
Price / |
Price / |
Price / |
Gross |
|
annualizing Sept 3 mos |
Cap (mm) |
Sales |
Earnings |
BookValue |
TangibleBV |
Margin |
|
Youku.com (YOKU) |
$1,025 |
14.9 |
-31 |
4.8 |
5.1 |
14% |
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Netflix (NFLX) |
$9,690 |
4.5 |
64 |
50.5 |
134.6 |
38% |
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YOKU quarterly results |
June 2009 |
Sep-09 |
Dec 2009 |
March 2010 |
June 2010 |
Sept, 2010 |
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Revenues ($mm) |
$5.1 |
$7.2 |
$8.1 |
$7.3 |
$10.7 |
$17.2 |
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Gross profit % of rev |
-56% |
-15% |
-10% |
-38% |
-16% |
14% |
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Operating margin % of rev |
-129% |
-80% |
-80 |
-102% |
-81% |
-34% |
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One ADR represents 18 common shares |
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BUSINESS |
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Online videos in China. .Says it is "the most recognized online video brand in China". Wants to be the Youtube/Netflix of China. |
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. In 2009, had an implied market share of approximately 14% in terms of online video advertising spend in China, based on iResearch’s estimated total online video advertising spend in China |
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. Had a 40% market share in terms of total user time spent viewing online videos in China during the second quarter of 2010, while the closest competitor accounted for a 23% market share during the same period, according to iResearch. |
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. According to a 2010 survey conducted by an affiliate of the Chinese Academy of Sciences. According to iResearch, had 203 million monthly unique visitors from homes and offices in September 2010 and 61 million monthly unique visitors from Internet cafes in August 2010. |
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COMPETITION |
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. Competes with other online video providers in China, such as Tudou.com, and large Chinese Internet portals that provide online video product, such as SINA and Sohu.
. Also competes with traditional advertising media, such as television, radio, newspapers and magazines, and major out-of-home media, such as billboards, for advertisers’ advertising budgets.
. Large enterprises currently spend a relatively small percentage of their advertising budgets on online advertising as compared to the percentage they spend on traditional advertising media, but YOKU expects the percentage spent on online advertising to increase in the future. |
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USE OF PROCEEDS, $139mm |
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. $30 million for investments in technology, infrastructure and product development efforts
. $25 million for video content acquisition
. $20 million for the expansion of sales and marketing efforts; and
. Balance for other general corporate purposes, including working capital needs and potential acquisitions |
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Youku.com |
YOKU, B-, 8 |
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Post ADS equivalents: 103mm |
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Internet video |
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Beijing, China |
2007 |
2008 |
2009 |
Sept9mos09 |
Sept9mos10 |
IPO Mkt |
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Revenues ($mm) |
$2 |
$5 |
$23 |
$15 |
$35 |
Cap (mm) |
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Gross profit |
-2496% |
-418% |
-41% |
-58% |
-6% |
$1,025 |
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Net income* |
-$13 |
-$31 |
-$27 |
-$20 |
-$25 |
@$10 |
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Net income % of rev |
-722% |
-620% |
-117% |
-133% |
-71% |
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*Sept 9 mos includes $2.6mm or 7% charge for change in fair value of derivative financial liabilities & warrant liability |
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Quarterly results |
June 2009 |
Sep-09 |
Dec 2009 |
March 2010 |
June 2010 |
Sept, 2010 |
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Revenues ($mm) |
$5.1 |
$7.2 |
$8.1 |
$7.3 |
$10.7 |
$17.2 |
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Gross profit % of rev |
-56% |
-15% |
-10% |
-38% |
-16% |
14% |
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Operating margin % of rev |
-129% |
-80% |
-80 |
-102% |
-81% |
-34% |
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Valuation Ratios |
IPO Mrkt |
Price / |
Price / |
Price / |
Price / |
% offered |
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annualizing Sept 3 mos |
Cap (mm) |
Sales |
Earnings |
BookValue |
TangibleBV |
in IPO |
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Youku.com (YOKU) |
$1,025 |
14.9 |
-31 |
4.8 |
5.1 |
15% |
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SCORECARD |
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Mgt |
Market |
Market Do- |
Proprie- |
Total |
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1-5, 5 is high |
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Growth |
mination |
tary |
rating |
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20 is perfect |
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2 |
3 |
2 |
1 |
8 |
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COMPARE |
IPO Mrkt |
Price / |
Price / |
Price / |
Price / |
Gross |
|
annualizing Sept 3 mos |
Cap (mm) |
Sales |
Earnings |
BookValue |
TangibleBV |
Margin |
|
Youku.com (YOKU) |
$1,025 |
14.9 |
-31 |
4.8 |
5.1 |
14% |
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Netflix (NFLX) |
$9,690 |
4.5 |
64 |
50.5 |
134.6 |
38% |
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