15/04/2008
Asian online advertising agency Pixel Interactive is outpacing the fast-growing regional market, thanks to a fertile mix of organic and acquisitive growth.
Selling advertising sales on behalf of a network of online partners – such as MSN Hong Kong, Bloomberg Asia, MTV Asia – the group expanded its reach during the year to December by acquiring a Beijing-based business and adding new offices in Shanghai and Singapore. Group profits, before tax and exceptionals, grew by 70% to US$2m (£1m), on sales up 68% to $12.9m, ahead of a global market growing at 23%.
Pixel's well-established Hong Kong office grew sales by 32% and a newer Malaysia office by 180%, accounting for most of the top line total, whilst Singapore lost money and China generated good profits from $1.6m sales.
Chief executive Kevin Huang attributed the improved financials to the continuing ‘migration’ of advertising budgets from offline to online, as well as a doubling of the company’s headcount. This enabled Pixel to broaden its base of advertisers by 43% and reduce dependence on its ten largest partners from 94% to 88%. Huang also signed an exciting agreement with mobile giant Nokia – ‘they only had a small team in Asia so we’ll sell WAP advertising for them in our four markets,’ he explains.
Cash-rich with $7.8m, Huang intends acquisitions to strengthen existing market positions, add services and take Pixel into new geographies. Even with current operations flying and the Olympics expected to provide a kick this year, the shares have been largely shunned, possibly due to wider advertising budget worries. This ignores Asia’s superior growth rates and we rate the shares, trading on a modest prospective p/e of 11.3, as a speculative buy.
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| Market cap: | £14.09m |
| PE Forecast: | 11.3 |
| Share price: | 36.25p |
| AIM | £7.81m |
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