Buyers and Builders
00:18:55 · Eric Tan, Mikk
[00:18:55] S1: I think in general, we have never built in any exit scenario at our investment stage. We all assume that we're to own them forever. But like you mentioned, I think we all have to be quite practical and as directors of companies, our fiduciary duties to, you know, kind of decide for shareholders and recommend the shareholders what's the right thing to do, and when a very attractive offer come to the table, we will have to, very, honestly, and, and practically assess them, so, we have never had to confront a conversation today, but I think the general approach is that, you know, each time they will come to us and say, would you sell your portfolio companies, we will just say no, because that's not how we, how we do it, but we also have never had a situation where someone put a very attractive offer on the table yet. So all I can say is that we would have to assess it on a case to case basis, but the general principle is that we do not buy to sell. [00:19:49] S0: Can you give me more overview of of the of the separate pillars, digital media, b two b expo, technology sector, like software companies? Let's go one by one. What type of companies you you own? What you guys are doing? And maybe talk a little bit about the synergies on the portfolio level as well, if there is.
00:20:08 · Eric Tan
[00:20:08] S1: So on digital media business, the the primary kind of foundation of the business are digital media publishers that attract a lot of consumer attention across our social media pages, Instagram, TikTok, Facebook, which is like a Chinese platform in Asia, and and TikTok, the likes of that, and our websites. And advertisers will come to us and run campaigns on some of these pages. That will be the kind of foundation. So alongside, we also provide KOL or influencer agency services where we could upsell to our customer. We also started going into kind of the online to offline sort of integrated digital media solution where we provide outdoor advertising to some of our clients, and the whole, the whole thesis is revolves around increasing the wallet share of our, our advertisers, and how it came, the the whole idea is now they spend a million bucks a year. How do we get it to 1 and a half? And over time, we we realized that a lot of advertisers, at least at least in the in the market that we operate in, are quite lazy. They wanna deal with one media platforms rather than multiple. And we also happen to operate in a country where the language is quite fragmented. So in Malaysia, half the people speak our national language, call Malay, and then about 30% of people speak Mandarin or or Chinese, and there is maybe 70% of people speak English and because it's so fragmented as a media buyer, it can get quite complicated because multiple language, multiple audience you're trying to to target. So, our advertisers will come to us and and treat us a one stop shop amongst all the other, you know, Facebook and and meta TikTok of the world as they want to launch campaigns to to to to reach consumers. So these are all very much awareness based advertising. So today, the the media business consists of horizontal publishers business. So these are lifestyle sort of content. We also have vertical focus publishers in the automotive space, in the technology space where the the content is revolves around reviewing cars, reviewing gadgets, etcetera. We are in immersive solutions as well. So solutions like what TeamLab does in in Japan is something that we can provide as well to our our advertisers.
00:22:36 · Eric Tan
And and more recently, we went into the out of home billboard business, specifically digital billboard, like the Lamar of the world, as a kind of add on solutions to our customers, which we went in organically, so we decided that, hey, it's very synergistic, customer has been asking us, if they can buy digital out of home billboard, kind of inventory through us, and eventually, we, we decided we want to be media owners, so we went into that. So that is kinda the makeup of the digital media business today. It's it's really revolves around customer coming to us to buy ads online, and then how they provide a three sixty solutions to to our customers and and kind of monetize and expand our wallet share from advertisers over time. So that is about 85% of the whole group today. We started this business in, I think, '21. We acquired a platform business of iMedia. At the time, it was doing about 23,000,000 Ringgit, which is about 6,000,000 US in revenue. Today, it does about... This year is on track to do about 25,000,000 of US revenue. So that's that's quite skilled now as part of the portfolio. So that will be the digital media business. The second pillar that we went into last year was b two b trade expo. So b two b expo, you can think of it as a event where a supply chain of a particular industry come together and network and transact. So as an example, today, we host the three largest expo in Malaysia, one in agriculture, one in food and beverages and one in construction. So take F and B as an example, the food and beverage sector. We rent a convention hall once a year for four days. The the supply chain of the F and B would come and exhibit. So some examples would be packaged goods, could be prepackaged materials for for the particular industry. It could be machines for for, like, a coffee machine or an industrial grade food manufacturing machines. It could also be furniture companies that targets like hotel. So then the the visitors or the the buyers of the expo would be what we see from a consumer standpoint, the the group of F and B chains, right? So, it might be Pizza Hut, it might be Starbucks that comes as a buyer, and it could be hotel chains like Marriott that that comes and source for products. So, that is kind of the dynamics of the the trade expo business.
00:25:09 · Eric Tan
In in many case, it functions a little bit like online marketplace where it takes a while to really build up the brand reputation. If you wanna buy a house in The US, you go to Zillow, right? So it's like online marketplace where, you know, all the people who wants to buy a house will go there, all the people who sell houses will go there. In in the offline sense, it is like that as well in, in the B to B trade expo where, whoever that wants to, you know, transact, and these are typically big transactions where you can't, you don't really decide on based on what you read on the internet, you might spend 1,000,000 or 10,000,000 a year on your procurement budget and you want to meet the buyer, the seller, to really decide whether you want to transact or not. So that is a sort of like a offline marketplace dynamics where you have strong network effect as you build to scale. And when you're on a known brand in a particular country, you always come back. And for us, it's also a buy and build approach. So we took a 60% stake in a company. 40% is held on by the founders and the CEO of the business, and we're executing a a buy and build approach. So when we took over the business as a 60% partner, it has two shows. Earlier this year, we added the FNB shows to the portfolio, and we... That's a company we bought from, which is a sovereign wealth fund out of Singapore adding to the portfolio. So going forward, we'll work very closely with the with Roger, who is our CEO, to continue acquire independent SMEs in this space as a kind of a buy and build approach. So that's the b two b trade expo business.
00:26:57 · Mikk
[00:26:57] S0: I wanna add here. Why is it a great business? Why is it a great business?
00:27:02 · Eric Tan
[00:27:02] S1: Yeah. Why is it a great business is because a few things. One, it's very hard for a a new player to come into a b two b trade expo space because it's very hard to convince exhibitors to come to a new show when you don't, you can't guarantee that there will be visitors coming. Likewise, on the other end, it's also very hard to convince a buyer to visit a new show if you can't guarantee there will be exhibitors coming. So, it's a little bit like online marketplaces where you need the supply to get the demand, but you also need the demand to get the supply, and it typically takes a while to, to get there, that's one dynamics that's very favorable for a stable show, Two is, once you get to like the number one or number two, you typically have quite good predictability in the business in in that one, you know you can raise price of above inflation, because people want to come back to you, so the price increase will not be a challenge over time. Two is, as you become the number one or number two player in the expo space, you naturally gets allocated a budget in your customers at the end of the year when they are planning for the next year. So, like, for the gold standard of the, the trade expo businesses that we, we look at, typically when they finish the show this year, let's say, we finish the show this today, July 10, they already know, like, 80% of the revenues locked in for next year's edition, and that's a part that we really like, about the business where you, you, you can really predict how the business, performs next year, barring, you know, like trade war and external factors, it's quite a predictable business, that's why we like it quite a lot.