HK 第29部分; The hangover

This is not the sequel to "HK 第27部分; Party like it's 1999!". Instead this post is about a monopolist/oligopolist software business

Special thanks to Tristan for bringing this company to my attention.

» Intro

Three IT companies - Tradelink Electronic Commerce $536.hk, Global e-Trading Services or Ge-TS (a subsidiary of Computer and Technologies Holdings ($46.hk), and Brio Electronic Commerce - are licensed to provide Government Electronic Trading Services (GETS), an electronic service platform through which the trading community submits the main trade-related documents to the Government. In this post I focus on Tradelink, the dominant company in this market. Much of the information is very relevant for its listed competitor, Computer and Technologies, as well.

» Characteristics

• Broker availability: DG, IB (including residents: US, C, Europe) ¹, S

• Business type: Transaction and project-related, and a small portion recurring revenues

• Domicile: Hong Kong

• Market cap: USD 50-100m

• ADV: USD 20-50k

• Valuation: c9-10x P/E, c10% DY, 0.6x FAV/P

• Founder-owned & -operated: No

• Growth profile: Poor, with considerable risk/uncertainty in the medium-term

• ROIC profile: Strong, with considerable risk/uncertainty in the medium-term

• FCF profile: Strong, with considerable risk/uncertainty in the medium-term

• Financial health: Strong

1. Tradelink Electronic Commerce

• Ticker: $536.hk

• Share price: HK$ 0.92