RHM is a tiny media brokerage. It’s market capitalisation is £3.5m – so it is ultra small. What is interesting is that in January 2014 it sold its interest in Red Media Asia to PUC founder Berhad (PUCF). This was funded by PUCF selling shares in itself to RHM.
So RHM has a few legacy businesses and shares in PUCF. It also holds a number of PUCF warrants.
The PUCF holding is currently worth £14.6m GBP.
This is four times RHM’s market cap – a 51% stake in PUCF.
They have recently sold down £1.1m worth and raised a further 300k through warrant sales.
At the half-year RHM’s balance sheet had another £900k worth of cash.
RHM does not have a controlling shareholder.
I have looked at PUCF – it is trading at a PE of 14, seems to be reasonably stable and has a sensible balance sheet.
Interestingly RHM did an internal restructure – transferring its main asset to “give Resource Holding Management increased corporate options and flexibility for possible future corporate activity”.
I believe something may happen and they are getting ready for whatever that is…
I believe this is a valuation anomaly. It could be another example of the market hating Chinese stocks – as evidenced by Tinci.
As a target I would expect RHM to rise to 21p+ a share before the end of the year – a tripling of your initial investment.
I don’t usually do this but if you find this tip useful, interesting or potentially profitable could you do me a favour and vote for my friend Claire Hall in the Virgin Business awards.
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