Galasys has raised £3.1million, giving it a market capitalisation of £16.6million. This puts it on a valuation of just over 13-times post-tax profits. Listed on AIM a week ago, Galasys is a technology firm focused on Chinese theme park market. That might sound a bit niche. Yet Middle Kingdom is host to a number of magic kingdoms of rides and roller coasters that dwarf anything we have here in the UK.
The Chime Long Guangzhou Tourist Resort, for instance, was host to 14million visitors in 2013.
Galasys provides ticketing management systems and solutions to many of the big parks.
Meanwhile, Blackpool, the quintessentially working-class British resort, with its donkey rides, trams and the tower, received 4.5million visitors last year. The scale of these Chinese operations ranks right up there with some of the largest American destinations. It is important to grasp this when assessing the potential of Galasys.
The group provides ticketing management systems and solutions to many of the big parks. Not only is Chime Long one of its major customers, it has another 13 of the top 20 largest theme parks and it has 15 of the top 20 water parks on its roster. In fact it has sewn up 65 per cent of the premier theme park and 75per cent of the water park markets. In all it has over 60 clients and printed more than 90million tickets last year. For a technology company new to the junior market, it is an oddity in that it is profitable.
Galasys has raised £3.1million, giving it a market capitalisation of £16.6million. This puts it on a valuation of just over 13-times post-tax profits, which is relatively modest by anyone’s standards.
Peer comparisons are difficult to find.
But it is worth pointing out that London-listed Accesso Technology Group (LON:ACSO), which provides queuing solutions for theme parks, generated after-tax profit of just under £2million, yet has a market capitalisation of £112million.
Now, we may not be comparing apples with apples, but it suggests there may be some upside in the weeks and months after the IPO. Galasys’s portfolio spans ticketing, point of sales, electronic commerce, e-wallets and customer relationship management. It must be stressed that the group’s offering is software based, and therefore higher margin than a traditional hardware business.
Each of its top 10 customers takes at least three of its 10 major modules and are continuing to buy more every year. In the five years from 2005, Galasys concentrated on simply licensing is software and services, gaining additional revenues from maintenance and upgrades and purchase of additional modules as its customers’ operations grow. But since 2010, Galasys added new engagement models to just ‘solutioning’. It began ticketing and IT outsourcing, or in the case of the second-tier operators, taking over the certain aspects of their operations such as ticketing.
- GALASYS AT A GLANCE
- Ticker: GLS
- Value: £17million
- Listed at: 22.5p
- Current price: 24p
While this has meant significant investment upfront, the payback is a revenue share based on the number of tickets sold. It means as these parks expand, so do Galasys’s top and bottom lines.
‘This is a very scalable and profitable model, but there is investment upfront,’ says chief executive and co-founder Seah Kok Wah.
‘This is the business model that we will continue to grow more aggressively after the listing.’This evolution of the business model is part of a well thought out expansion programme, which will be funded from the cash raised at IPO.In addition, the firm’s development of a cloud-based ticketing sales service will allow theme parks to sell their park tickets via online travel agents – the Chinese equivalents of Expedia and lastminute.com.
This platform should be up and running next month and Galasys will receive a revenue share of whatever is sold online – this might be as much as $1 a ticket. It should be emphasised that the cloud-based platform is low cost, so much of the revenue generated will drop to the bottom line. The group is also looking to grow geographically, starting with Asia. There are also opportunities to develop products that help boost the amount of cash spent per visitor that lend themselves to further revenue sharing opportunities. Meanwhile, there is also the opportunity to add new customers in China to its roster.
Chairman Teh Kim Seng said: ‘We think we have an interesting story of where we came from and where we are heading.’
(Source: http://www.4inews.co.uk/galasys-sees-china-as-just-the-ticket-to-future-success_151784/, 19 May 2014)
(Source: http://www.thisismoney.co.uk/money/investing/article-2632773/SMALL-CAPS-SHARES-IDEAS-Galasys-sees-China-just-ticket-future-success.html?ito=feeds-newsxml, 19 May 2014)