Background: Formerly known as Spice i2i or Mediaring.com, S i2i is a telecommunications service provider with a strong focus on mobile internet solutions. The company is evolving from just a backend IP communications business into a mobile internet solutions provider with its own brand of handsets, valued‐added services such as S‐Unno (a mobile application which allows international calls at low cost rates), and a regional network of handset and mobile device retailers in Singapore, Malaysia, Thailand and Indonesia.
Key ratios…
Price‐to‐earnings: nm
Price‐to‐NTA: 0.6x
Dividend per share / yield: na
Net cash (debt) per share: US$0.004
Net cash (debt) as % of market cap: 8.8%
Share price S$0.046
Issued shares (m) 5,382.1
Market cap (S$m) 253.0
Free float (%) 51.6
Recent fundraising activities Jan ’11 – 1‐for‐1 rights issue 2.74b shares @ S$0.055/share, July ’10 – 1‐for‐1 rights issue 1.37b shares @ S$0.10/share
Financial YE Mar 31
Major shareholders Spice (27.1%), Lee Pineapple Company (13.2%)
YTD change ‐61.6%
52‐wk price range S$0.04‐0.13
Our view
Newly acquired businesses in place. After a reverse takeover in 2009 by Indian conglomerate Spice Group, S i2i embarked on a strategic growth plan that led to a series of acquisitions of mobility businesses. The company spent a total of S$262m to acquire three handset distributors and retailers in Malaysia, Thailand and Indonesia to extend its regional influence. They are CSL Entities, NewTel Corporation and most notably, Affinity Group.
No positive impact on bottomline yet. On the bright side, S i2i saw a jump in revenue of 160% YoY to US$162m for the first quarter to June 2011, driven by the newest acquisitions, CSL and Affinity Group. On the flip side, it posted a net loss of US$6.5m due to higher operating overheads, marketing and infrastructure costs coming from the completed acquisitions.
But at least one acquisition looks promising. The most significant acquisition appears to be Affinity Group. Its mobile handset brand, Nexian, has a 25% market share in Indonesia. This targets the low‐end pricing segment and is aided with distribution channels and cellular connections from major operators in Indonesia. Through this acquisition, S i2i became the first Singapore company with the largest market share in the mobile market in Indonesia. Affinity Group was profitable with net profit of US$29.7m reported in FY Dec10.
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