The lackluster price performance of Vividthree may be attributed to poor market sentiments and high historical PE valuation. While it’s easy to get distracted amidst all the market action, it is always good practice for investors to revisit their investment thesis and review what has changed. “Know what you own, and know why you own it”- Peter Lynch
The investment thesis of Vividthree
1. Profitable business (traditional bread and butter post-production business is profitable, with an increasing use of visual effects in movies/TV/commercials for a better story narration in a cost-efficient manner)
2. There is a growth story
• upcoming venture into the train to busan Virtual reality (VR) tour is a potential game changer with a highly scalable business model that will drive future earnings growth for the group. (Not to mention, the tour may get free “publicity” and rise in interest when Train to Busan 2 is released)
• Management’s intention to acquire/develop more immersive experience IPs coupled with support and network from its parent, mm2, suggests continued growth story beyond train to busan VR tour.
• Virtual Reality is a rising trend with wide range of uses across sectors from gaming to education- Vividthree is slowly strengthening/developing its capabilities in VR, and is (probably the only) SGX listed proxy to the rising penetration of VR.
3. Net cash balance sheet As at end of 31 Mar 18, Vividthree has a net cash of S$2.2m, which will be further boosted post IPO with net proceeds of S$11.2m (vs its IPO market cap of S$83.5m) – cash war chest for it to execute on its growth ambitions
Vividthree is underwater - But it also means low investor expectations, potentially setting the stage for surprise to the upside with the imminent launch of its Train to Busan VR tour.
Vividthree will be having a luncheon presentation at Philips Capital today, 26 Sep 18.