Background:
Baosheng Media Group is a Chinese Online Marketing solution provider. It's main business model is connecting advertisers to online media. Managing marketing activities, advertising strategies, budgets, and ad optimization services.
Growth:
Baosheng Media Group has been steadily growing revenues seeing year over year increases from 2018 to 2019 of 10.5% from $16.16 million to $17.85 million. Securing long term contracts with many media moguls such as: Tiktok, Amazon, Ctrip, 360 finance and Youku.
Future Growth:
$BAOS ipo'ed in early February 2021, offering 6 million shares at a IPO price of $5 a share. Raising $30 million in proceeds which will be used for expanding the Company's business scale and building its network of leaders/acquiring employees.
China's digital marketing spending is rapidly growing, with 2021 forecasts expected to increase 20% from 2020. With expected annual growth of above 20% as companies are looking to more short-form video ads and social media ads.
$BAOS is looking to capitalize on this growth by utilizing funds to enter into new sections such as NFT marketing and into the crypto currency field. BAOS received backing and a $10million investment from Ebang $EBON in late March to develop a blockchain-based platform/NFT and crypto currency platform.
BAOS is looking to create a platform to buy and sell NFT related work and enter an exploding market. NFT's market cap grew 1785% from 2020 in early 2021 due to the NFT craze. With China leading the market in dollar volume and spending.
Margins and Ratios: (competitor valuations)
BAOS is a market leader when it comes to profitability and margins.
BAOS reported 9.5m and 11.16m in pretax income in 2018 and 2019.
Those are margins of 58.7% and 62.5% respectively for their years.
Return on equity: 43.2% vs market average of 4.78%
Return on assets: 13.27% vs market average of 1.27%
Their bottom line has been steadily improving year over year through developing efficiencies and capitalizing on market trends.
BAOS:
Market Cap: 172M
Revenue: 17.8M
Earnings per share of 0.4
Price to earnings of: 14.72
Net profit: 10.8M
Cash on Hand: 51M
SRAX:
Market Cap:115M
Earnings per share of (0.69)
Price to earnings: N/A
Revenues: 8.6M
Net Loss: (14.6M)
Cash on Hand: 451k
IZEA:
Market Cap: 270M
Revenue: 18.3M
Earnings per share of (0.248)
Net Loss: (10.2M)
Cash on hand: 33M
Comparatives;
As you can see BAOS is deeply undervalued compared to its peers. It is one of the few small cap marketing companies that are operating at a profit (62.5%) at that aswell. It also has the strongest balance sheet and cash balance among its peers.
Cash Position:
BAOS is flush with cash and there is no threat of any share dilutions/offerings. BAOS is sitting on over 51 million in cash. Broken out by 11Million in cash pre IPO, 30Million from IPO proceeds and another 10 million received from EBON.
BAOS is cash flow positive with cash from operations each year in excess of 9M annually, further increasing its cash position.
BAOS will be looking to utilize this cash to grow its business through acquisitions, new infrastructure such as NFT platforms and acquiring talented individuals.
Public Float:
Baos has one of the smaller active tradeable floats on the market. The initial offering only issued 6 million shares of BAOS with many of these shares being locked up until August.
The stock is largely unknown with volumes being very scarce. This is causing significant bid/ask spreads upwards of 3-4%. This also means there is very few walls for when this gains momentum.
China Low Float Recent IPO Trend
Chinese low float stocks have been getting pumped across the markets lately. Many of which have been recent IPO's due to their share lock up periods further reducing the floats.
Some prime examples include:
$EEIQ running form $3.58 to $35.20 in 2 days
$UTME running from $4 to $107 in 2 days
$WAFU running from $4 to $21 in 2 days.
$BAOS meets all the above criteria, with a small float, small market cap and in a hot sector. NFT/Crypto
Upcoming Press Releases:
I am expecting a press release to be issued in the next week or two regarding the demo/roll out of their NFT platform.
BAOS's first press release was issued on March 18th regarding the EBON collaboration and entry into the NFT field. This was the first day the company could release news due to its 40day quiet period after a IPO. EBON stated in early February it was looking to enter the NFT field. I expect the partnership was entered in early to mid February. Meaning a news release on the development of the platform for BAOS should be right around the corner.
NFT press releases have cause stocks to skyrocket, and was the hottest sector in March. With stocks such as TKAT, HOFV, DLPN and WKEY gaining as much as 1000%. These stocks have cooled off but most are still trading at 2.5-5x their pre press release values.
The market has cooled off since March but I do expect a large movement the day the PR comes out due to the thin walls and small public float.
Summary/Price target
BAOS is a unknown hidden gem. The cash obtained through IPO and Ebon investment will help it improve/expand its infrastructure and significantly grow the business. BAOS is already experiencing over 10% annual growth and these numbers will explode in 2021 thanks to China's online marketing spending growth of 20% + in 2021 combined with BAOS entering into the NFT market which grew 1785% from 2020. BAOS is sitting on over 51m in cash and there is no risk of share offerings due to its cash flow from operations exceeding 9m a year. BAOS is a market leader when it comes to cost minimization and profit margins, experiencing over 62% margins in 2019. BAOS is unknown to many and is not getting the traction is deserves, the first press release will send this flying thanks to its bid/ask spread and being in the NFT sector. BAOS is undervalued compared to its peers. It is one of the few profitable marketing small cap companies and is sitting on a boat load of cash.
PT Short Term (May): 10$ after the press release relating to the release of its NFT platform. This would make it the similar market cap as IZEA, while BAOS has substantially more cash and is reporting 11m in net income vs Izea's 10M losses.
PT Long Term 2022: $25
I expect revenues to climb 30% + in 2021 thanks to China market growth and entering new NFT fields combined with purchasing/acquiring new infrastructure and talent. BAOS is still being valued as a marketing company (undervalued) and has not capture any of the NFT/Crypto attention.
Submitted April 07, 2021 at 08:43PM by lFUCK https://ift.tt/2OtGW0m
