Trade Idea #7: HK-listed small cap with multi-bagger potential

Hong Kong-listed cash flow positive small cap trading at <1x EV/EBITDA, with ~80% of market cap in net cash

We recently initiated a position in a Hong Kong-listed small cap equity that in my opinion represents one of the names within our portfolio with the highest potential to be a multi-bagger. A few facts about the company that are sure to spark some interest:

• Trades at a sub-1x EBITDA valuation, with ~80% of its market cap in net cash.

• Business model is NOT terminally challenged.

  • Company has a 4-year annual revenue CAGR of 20+%, and ~30% EBITDA margins

  • While the business is being valued as if revenues are facing terminal decline, the company has solid prospects of maintaining “no-growth” going forward (with significant upside if it can achieve meaningful growth in the future, which is entirely within the realm of possibility).

• Financials are Big 4 audited

• Two-person founder-manager team collectively own more than 40% of the common equity