GHY Culture (Stock Code on SGX: XJB)

Target Price: $0.80, $0.85, $1.08 (Trade Management: exit in 3 tranches)

Current Price: $0.75

About GHY

- Recent IPO stock, IPO-ed at 66 cents

- Drama and concert production company, with focus in Singapore & China

- Many works are in the pipeline and have been completed in 2020

- Recent CEO purchase of shares (1.08 million shares in December 2020, at about 67 cents)

- Company swung to net profits in 2019, and it is expected that 2020 net profits will increase further (due to continued production within China) with positive Earnings Per Share.

- Well-diversified business, with three arms: TV & Film Production Business, Concert Production Business, Talent Management Business & Costumes/Props/Makeup Business.

- Earnings on online video platforms experienced CAGR of more than 20% in the last 5 years. Company is actively looking to diversify into the online space further. (For short-form video, CAGR is more than 150%). Note that this is a high-growth and stable market due to China's emerging middle class & the recurrence of income as a result of the nature of the production (drama series).

Upcoming catalysts

1. Resumption of concerts, particularly Jay Chou's contracts - pent-up demand in the Asian markets

2. UOB KH may decide to scale up its position in GHY Culture further (initiation of coverage: 19 January) (note: UOB Alpha Pick's time-frame is 1-3 months and not the usual 12-month investment horizon)

3. Contract announcements

4. Wider analyst coverage

5. Earnings report should not be too bad, given the focus on China drama series in 2020

Investment Risks

1. Exacerbation of COVID19 such that concerts are unable to resume as planned  (However, note that the company is well-diversified into the online space and thus might be minimally affected - nonetheless, a worsening of the COVID situation in Asia could lead to adverse investor sentiment)

2. Non-exclusivity of contracts with top celebrities such as Jay Chou may mean competition threat. However, due to the long working relationship with Jay Chou, this is rather unlikely.

Suggested Entry Points

1. 75 cents 

2. 72 cents which is the next support and AOV (Area of Value)

Suggested Stop Loss

About 68 cents (IPO price + 2 cents)

Technicals

Pivot points on 4 hourly chart have been marked.

Buyers in control, with 50 EMA likely to slant upwards soon and to serve as support.