Audience Analytics 1AZ , the Malaysia-based organiser of exhibitions and award shows and publisher of business magazines, plans to focus on organically growing what it has at hand and venture into new markets with strategic acquisitions.
Its portfolio of brands is indeed impressive, ranging from titles such as SME Magazine, HR Asia and Capital Asia to events Mega Career Fair, SME Solutions Expo, Malaysia Career & Training Fair, Post Graduate Education Fair, ITX Asia and awards like SME 100 Award, HR Asia Best Companies to Work for in Asia Award and CXP Best Customer Experience Award.
One upcoming event that Audience Analytics has in Singapore is the Golden Bull Award 2023, which celebrates business excellence and inspires more businesses to think globally and innovate together. The Edge Singapore is the official media partner for the event.
William Ng, chairman and MD of Audience Analytics, is confident he has the right business model to grow efficiently without requiring significant capital or assets.
Ng compares Audience Analytics’ business to mega coffee chain Starbucks which is all about expanding its number of outlets after having “perfected its ingredients and recipe”.
Says Ng in an interview with The Edge Singapore: “Anyone can open a café but not everyone can do it well. It’s all about the processes and how they make the coffee.”
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“Like Starbucks, our brand is well-known today in most markets. Also, our internal processes are all well-defined. We understand what works and what doesn’t. It’s not experimental,” he adds.
Apart from having its strong brands, Ng says that Audience Analytics is perhaps the only company in Malaysia with such geographical breadth and depth of its brands.
“We are about four to five years ahead of our competitors,” says Ng, adding that the HR Asia Award is currently in 15 markets, while the SME100 is in four markets and will expand into Thailand this year.
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Ng is overall upbeat about the business outlook too. “As economies reopen regionally, we find ourselves in a position to expand our business recognition portfolio into new markets and attract new participation from leading corporates,” he says.
The company’s key operating markets of Singapore and Malaysia are experiencing rapid recovery. In particular, Malaysia saw GDP reach 8.7% — the highest level in 22 years. Alongside the reopening of Chinese borders, the company is optimistic that a positive surge in business activity will be seen in China and other regions.
“Over the past 20 years, we have accumulated a database of over 500,000 engaged business owners and decision-makers. Many of these businesses have grown with us across markets and business cycles. This represents a significant opportunity to tap into our existing and upcoming brands. We are excited with the runway this represents,” says Ng.
Humble beginnings
Ng’s entrepreneurial journey started in Malaysia in 2002 with just RM3,000 in his pocket to start an exhibition business. It grew steadily for a few years before the Global Financial Crisis hit in 2008–09.
Thankfully, Ng had already ventured into publishing, which helped offset slower growth as companies cut back spending on physical exhibitions.
He soon diversified into a third area: organising awards to recognise companies that have made an impact but were not so well known. Interestingly, what Ng thought was a non-profit activity took off quickly and became “rather profitable” for Audience Analytics as awareness grew.
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Ng reveals that while the three businesses look separate, they share the same goal. “All our businesses aim to help other businesses do better in what they do. The exhibitions help to connect businesses, the media platform helps to educate them and the awards help them better understand themselves,” says Ng.
Audience Analytics was listed in Singapore on September 2021. With proceeds of some $5.5 million, the company invested in artificial intelligence (AI) technology and predictive analytics to enhance its business analytics capabilities. The funds will also expand its geographical footprint and digitalise its business operations.
Ng explains that he chose Singapore Exchange over Bursa Malaysia to achieve wider geographical coverage and a lower reliance on its home market. Two-thirds of Audience Analytics’ revenue already comes from outside Malaysia and Ng aims to bring this proportion even higher.
The company has a rather consistent track record of earnings growth over the past five years except for FY2020 ended Dec 31, 2020, when the pandemic hit. It recovered in FY2021, reporting higher revenue and earnings of $9.88 million and $4.21 million, up 30% and 43% y-o-y respectively.
For its most recent FY2022, the company posted further growth, with earnings and revenue up 35% to $5.69 million and 43% to $14.1 million respectively. The bulk of its revenue came from its so-called business impact assessment and recognition segment, which saw a significant increase in participants in the various awards it organised. Meanwhile, with the easing of the pandemic, its exhibitions segment is seeing signs of recovery as well, with the resumption of activities in Malaysia, Singapore, Thailand and Taiwan.
Ng says events in Malaysia were not halted by Covid-19 as it had planned events to coincide with the reopening. “Despite the transition from virtual to physical events, our gross margins have remained relatively stable, thanks to the scalability of our business model and the strength of our brands,” says Ng. In FY2022, gross profit margin decreased marginally by 1.6 percentage points (ppts) to 64.4% from 66.0%.
Ng says the margin slip was smaller than expected as “costs of everything” has gone up faster than revenue. “We were not very sure about the impact of the transition of virtual programmes back to physical ones. We knew it would not impact our margins much but we could not be sure until the results were out.”
Looking ahead
Audience Analytics intends to enter new markets and ramp up its cross-selling efforts to open up new revenue streams and expand its portfolio. Ng also points out that it is holding on to a “fair bit of cash” at this moment.
“We have every intention to deploy this [cash] strategically. We have nothing specific at this point but we intend to make strategic acquisitions in [companies in] adjacent industries,” says Ng. That way, the potential acquisition target can tap into Audience Analytics’ database of businesses and market expertise to grow the business organically.
However, Ng does not have an M&A timeline. “We do not want to put a timeline and pressure internally because we don’t want to acquire for the sake of acquiring. It has to be something sustainable for us and the businesses we are acquiring,” he says.
Following its FY2022 results release, Lim & Tan Securities initiated a “buy” call on Audience Analytics with a target price of 42.5 cents, pegged to 10.6 times FY2023 estimated earnings. “Audience Analytics is a rare value-growth gem with a highly scalable business that has grown its earnings from FY2018 to FY2022 at a CAGR of 28%,” says analyst Ng Yong Rui, adding that global peers are trading at 26.7 times earnings.
The analyst likes the stock for its highly complementary business segments with an “extremely scalable” asset-light business model, significant cross-selling opportunities across its various award programmes, and doubling of the company’s net profit between FY2019 to FY2021 despite the pandemic.
In line with the better earnings, Audience Analytics plans to pay a dividend of 1.80 cents per share in FY2022, which represents a payout ratio of 53.2%. This is also an increase of 42.9% over the 1.26 cents paid out in FY2021, which translates into a payout ratio of above 50% as indicated by the company at the time of its listing. “We believe the lucrative dividends yields are likely to continue in the future given the strong alignment of interests and strong free cash flow generated,” says Ng, the analyst from Lim & Tan.
Investors have yet to warm up to the stock, however. Audience Analytics was offered at 30 cents during its IPO and its share price closed at 29 cents on March 22, valuing the company at 8.58 times historical earnings and giving it a market value of $48.8 million.
