FOR a company with a market capitalisation of only S$19 million, Noontalk Media garners surprisingly strong interest from readers of The Business Times.

 

Whether the story is about its initial public offering in November last year, or the losses it reported for its most recent financial year, Noontalk chalks up consistently high page views.

 

This might simply reflect the nature of its business: Noontalk manages professional entertainers, produces films and TV shows, and organises events. The company&rsquo s chief executive and controlling shareholder &ndash with a 62.6 per cent stake &ndash Dasmond Koh is himself a former radio deejay and actor who still finds time to co-host The Sheng Siong Show.

 

In the spirit of service to shareholders of Noontalk who may be among those reading our stories, this column suggests they should vote against the company&rsquo s share purchase mandate at the extraordinary general meeting (EGM) scheduled for Oct 23.

 

At the very least, shareholders of Noontalk should press its board to justify its stated rationale for proposing the share purchase mandate. In particular, Noontalk&rsquo s board should be asked to identify the threshold price below which repurchasing shares in the market would create value for the company&rsquo s remaining shareholders.

 

If Noontalk&rsquo s board is unable to identify that threshold price, it seems pointless &ndash perhaps even risky &ndash for the company&rsquo s shareholders to allow it to undertake share repurchases at any time.

 

Noontalk&rsquo s board should also explain why it is even considering returning capital to shareholders less than a year after listing on Catalist at great expense. Surely the company&rsquo s board and management should instead be focused on expanding and strengthening its business and restoring its profitability.

 

Chalking up losses

Noontalk sold 22 million shares at S$0.22 apiece through public offer and placement in November last year, raising gross proceeds of S$4.84 million. After subtracting listing expenses of S$1.59 million, the company was left with net proceeds of almost S$3.25 million.

 

The company said that it plans to spend S$2.28 million on extending its regional footprint and building up its businesses, especially in the film and drama field. A further S$0.48 million is earmarked for investment in multimedia technology. The remaining S$0.48 million is to be used for working capital and general corporate purposes.

 

Noontalk reported a loss of S$3.2 million for the financial year to Jun 30, versus a net profit of S$22,407 for the previous financial year. Revenue fell 34 per cent to S$4.2 million.

 

The company&rsquo s administrative expenses increased 112 per cent to nearly S$3.7 million, due to non-recurring listing expenses as well as higher staff costs and depreciation.

 

Excluding the listing and associated expenses, Noontalk would still have reported a loss of S$1.7 million.

 

Noontalk ended its FY2023 with a net cash position of S$3.2 million, and net asset value (NAV) of S$0.0263 per share.

 

Shares of Noontalk last traded on Monday (Oct 16) at S$0.096.

 

With the share purchase mandate, Noontalk would have the opportunity to scoop up shares at less than half the price at which it sold them to investors in November last year.

 

Yet, if Noontalk remains in the red, repurchasing its shares would effectively increase its loss per share on top of reducing its cash holdings, which it may need to tap to expand and strengthen its businesses.

 

The company&rsquo s relatively low NAV per share would also be diluted if the shares are repurchased at around current market prices.

 

Focus on growth

The share purchase mandate that Noontalk is putting forward at the coming EGM is not unusual, of course. Many blue-chip companies regularly put similar share purchase mandates before their shareholders.

 

These companies often state that their share buybacks are purely to meet their obligations under their employee share-based compensation programmes. Using treasury shares for these share-based schemes avoids the dilutive impact of issuing new shares.

 

This column is not suggesting that Noontalk should be held to a different standard. Yet, its shareholders should ask themselves why they invested in this tiny company in the first place.

 

Small, entrepreneurially-run companies operating in fast-evolving markets are attractive for the explosive growth they might offer one day.

 

Noontalk has certainly not been shy about touting its own growth potential. When it released its FY2023 results, it noted digital content consumption through on-demand streaming video platforms had surpassed cable and broadcast TV in 2022.

 

&ldquo This shift not only reflects a fundamental change in consumer behaviour, but also uncovers promising avenues for market growth,&rdquo it said.

 

Noontalk added that it sees vast potential in artificial intelligence as well as virtual and augmented reality technologies, and is seeking strategic alliances in these fields to drive its growth.

 

Noontalk said that it also sees continued growth in demand for in-person entertainment across the region, with Singapore shining as a hub for live events. On top of that, it has invested in The Chosen One, a movie of the supernatural genre filmed in Singapore and Penang that is expected to be released next year.

 

Shareholders of Noontalk should push the company to dedicate all its attention and resources to positioning itself to reap big returns from these exciting opportunities. This is simply not the time to be getting distracted by share buyback plans.

NOONTALK Media sank into the red in its fiscal second half from the year before, on a 60.6 per cent drop in revenue from its main business segment, production.

 

The Catalist-listed media entertainment company is led by Singaporean actor, TV host and radio DJ Dasmond Koh.

 

Its latest financial statement, released on Monday (Aug 21), showed that the production segment made S$1.2 million in the six months ended Jun 30, 2023, versus S$3 million in the corresponding half-year period a year ago.

 

As a result, the company&rsquo s H2 net loss stood at S$1.1 million, reversing a net profit of S$734,377. The results translate to loss per share of 0.57 Singapore cent, versus earnings per share of 0.47 Singapore cent.

 

Overall, revenue was down 46.8 per cent to S$2.2 million, from S$4.2 million in H2 2022. The company attributed the S$1.8 million drop in production revenue to lower income from film and drama, as well as livestreaming events. 

 

Contributing to the topline decline was also a 25.7 per cent drop in revenue from its management and events segment. The segment brought in S$959,922 in the fiscal second half, versus S$1.3 million in the year-ago period, when the company saw higher demand for artiste engagement to deliver Covid-related messages, it noted.

 

No dividend has been declared or recommended for the fiscal year, as the company recorded a loss in the year, it said.

 

NoonTalk posted a full-year loss of S$3.2 million with the latest H2 results, reversing a net profit of S$22,407 in the previous financial year. Full-year revenue stood at S$4.2 million, down 34 per cent from S$6.4 million in the previous FY.

 

The full-year loss was exacerbated by a 112 per cent or S$1.9 million increase in administrative expenses. 

 

The company attributed this to a rise in one-off listing and associated expenses of S$1.3 million, staff costs, and increase in depreciation of plant and equipment arising from renovation works performed following the extension of office and studio lease. There was also an increase in depreciation of right-of-use asset arising from the adjustment of the office and studio lease to a higher rental rate, the company added.

 

As at Jun 30, 2023, NoonTalk&rsquo s current assets stood at S$6.1 million, versus S$5.9 million a year ago. They comprise mainly cash and cash equivalents, trade and other receivables and contract assets.

 

Looking ahead, the company said the local and regional media and entertainment market is witnessing a &ldquo noteworthy&rdquo increase in demand for in-person entertainment experiences, which are projected to maintain a compound annual growth rate of 12.8 per cent from 2021 through 2028.

 

NoonTalk added that movie production &ldquo The Chosen One&rdquo , which it had invested in, is currently in post-production and is set for release in the second quarter of 2024.

Newly-listed NoonTalk Media has posted a net loss of $2.1 million for 1HFY2023 ended December, with revenue down 10.9% y-o-y to $2.0 million following a decrease in revenue contribution from its management and events segment.

 

Excluding the one-off listing and associated costs of $1.5 million, however, the company' s adjusted net loss would have been $624,086 for 1HFY2023, compared to a net loss of some $711,970 in 1HFY2022.

 

No dividend has been declared or recommended.

 

NoonTalk Media listed on Nov 22, 2022. There was a higher demand for artiste engagement from the previous period, 1HFY2022 ended December 2021, for Covid-19 related campaigns, adds the company.

 

Other income decreased by $58,720, or 39%, due to rental rebates in 1HFY2022 and lower government grants offset by reversal of interest on convertible bonds, interest income from fixed deposit and foreign currency exchange gain.

 

Gross profit contracted 47.4% y-o-y to $0.2 million due to an increased use of external vendors as projects moved to physical live events, says the company.

 

Cost of sales eased 4% y-o-y to $1.77 million in 1HFY2023, mainly due to lower artistes&rsquo engagement fees. This was offset by higher production cost due to projects requiring the engagement of a higher proportion of external vendors as projects move from virtual to physical live events, says the company.

 

Loss per share deepened to 1.26 cents in 1HFY2023 from 0.46 cents a year ago.

 

Cash and cash equivalents stood at $6.6 million as at Dec 31, 2022. This has contributed to a net cash position of $5.5 million for regional business.

 

As at Jan 31, 2023, the Company has an order book of S$1.4 million.

 

&ldquo Following the Company&rsquo s IPO in November 2022, we find ourselves in an ideal position to seize the exciting opportunities coming our way,&rdquo says Dasmond Koh, executive director and CEO of NoonTalk Media. &ldquo We believe a stronger balance sheet post-IPO will provide us with sufficient resources to pursue regional collaborations and engage in other creative endeavours.&rdquo

 

Koh adds: &rdquo We are optimistic about the overall growth of the company as demand for live events picks up again. The burgeoning number of audiences who value live experiences and are willing to spend more on events and live shows is a clear sign. We will continue to strengthen our multimedia segment with more innovative ideas and work closely with our artists to secure higher value projects on their behalf. As of this moment, we believe we have the right strategies in place to scale greater heights by the end of the year.&rdquo

 

Post-IPO, NoonTalk chief executive officer Dasmond Koh will hold a 62.6 per cent stake in the company.

MEDIA entertainment company NoonTalk : SEJ NaN% debuted on the Singapore Exchange (SGX) Catalist board at S$0.225, 2.3 per cent above its initial public offering (IPO) price of S$0.22, before closing at its IPO price on Tuesday (Nov 22).

 

This gives the stock a market capitalisation of S$43.6 million. The counter trades at 1,946 times its FY22 net profit of S$22,407.

 

The company had earlier sold 22 million new shares, comprising 4.5 million public offer shares and 17.5 million placement shares. The offering raised gross proceeds of S$4.8 million, or S$3.3 million in net proceeds.

 

The company&rsquo s chief executive Dasmond Koh said it was heartwarming to see how people who have followed his progress over the years have come on board to invest in the company. 

 

He noted that some potential investors are in their early 20s and have been fans of his since he was a radio DJ with Chinese radio station Yes 933. 

 

&ldquo Hopefully for those who have not gotten their central depository (CDP) account, please go and get it so that later on, they can support us,&rdquo he said.

 

The offering of 22 million new shares at S$0.22 per share and the listing date of Nov 22 may not be a coincidence. Koh considers 22 to be his special number, having been born on Feb 22 and also the 22nd winner of the Star Awards All-Time Favourite Artiste award in April last year.

 

Koh owns 62.6 per cent of NoonTalk. Other notable investors in the company include liquefied natural gas player Union Energy Corporation, as well as Sheng Siong Group managing director Lim Hock Leng and Citic Envirotech executive director Dr Chong Weng Chiew. Chong was a member of parliament for the Tanjong Pagar GRC from 2001 to 2006.

 

The company reports its revenue in two segments: the management and events segment, and the production segment. The former is made up of services such as artiste management and events conceptualisation and management, while the latter is made up of services relating to multimedia creation.

 

NoonTalk has provided multimedia production services for events such as Chingay 2022 and ChildAid 2021, an annual charity in aid of The Straits Times School Pocket Money Fund and The Business Times Budding Artists Fund. The company has been appointed by the People&rsquo s Association to provide production services for Chingay 2023.

 

NoonTalk also produces films and television programmes, as well as video content for companies such as Shopee, Eu Yan Sang and Audi Singapore.

 

Koh said the company aims to strengthen its regional partnerships and expand into the Malaysian, Thai and Chinese markets.

 

It already released Thai-Singaporean anthology horror film The Antique Shop in Thailand, Laos and Cambodia in June this year, with a release date in Singapore set for Dec 1.

 

Despite NoonTalk encountering some challenges with its regional expansion, Koh said he remains confident that the company can continue to build relationships and gain experience.

 

In July last year, it collaborated with WeTV, a popular Chinese video streaming platform owned by conglomerate Tencent, to produce a Thai drama entited Dear My Happy Working Life. However, production of the drama ceased nearing its completion.

 

While the customer still paid for costs incurred by the company for producing the drama, it recorded zero gross margin on the project.

 

&ldquo Even knowing that probably, the margin won&rsquo t be too high, or there might not even be margin at all but for the project itself, it opens up a lot of channels and windows for us,&rdquo Koh said, adding that he hopes investors understand the intangible value of forming relationships through such projects.

 

Within the talent management business, he said NoonTalk will focus more on helping artistes from other regional markets enter Singapore and Malaysia, where the company is confident in its understanding of how these markets work.

 

NoonTalk is also looking to bring more talent in-house as gross profit margins compressed after it had to secure specialised video cameras, as well as hair and make-up services for artistes and participants when it took on the Chingay 2022 project.

 

&ldquo We channel a lot of the profit that we make into investing into elite manpower, so that we can bring a lot of things in-house and cut down on costs. Without all this, we cannot grow,&rdquo he said.

 

The company said it will devote 47.1 per cent of gross proceeds from the IPO to extending its regional footprint in existing business verticals, while 10 per cent would go into multimedia technology investment and another 10 per cent would go towards working capital. The balance will be used for listing expenses.

 

NoonTalk also intends to pay out 20 per cent of net profit after tax attributable to shareholders in FY23 and FY24.

 

Still, Koh said that he hopes investors invest in the company with more of a growth-driven mindset.

 

&ldquo I think quite a majority of (investors) understand that we are a media company, a pretty different trade...the dividend doesn&rsquo t hit them that much,&rdquo he said.

 

Evolve Capital Advisory was the sponsor, issue manager and co-placement agent for the IPO, while CGS-CIMB Securities (Singapore) was also a co-placement agent and underwriter.