RedHot Media

SPECULATIVE BUY

22/01/2009 Robert Tyerman

Advertising broker RedHot Media International is contemplating more acquisitions after buying China-based In Motion Media for up to £3.2m.

With backers including Malaysian government funds and Korean institutions, Far East-focused RedHot hopes to beat the recession through its system of bartering. The company places advertisements in return for the products and services of client companies, which it then sells on.

RedHot, which is to pay cash and shares equivalent to 120% of In Motion’s net profits from 2008 to 2011, says its barter system improves margins and cuts inventories. ‘We want to become the e-Bay of China,’ says managing director Cheong Chia Chieh.

More acquisitions are on the cards, provided funds can be raised on acceptable terms in today’s tough markets. At 90p, RedHot’s shares value the company at £33m and might repay a long-term punt.

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Sector: Media

Companies: RedHot Media

Market cap: £33m

PE Forecast: n/a

Share price: 90p