Golfzon: Dominant 3D Virtual Reality Golf Simulator Company in Korea

Koon Boon Kee presented his in-depth investment thesis on Golfzon (Korea: 121440) at Wide-Moat Investing Summit 2013.

The Bottom Line: Established in 2000, Golfzon is the dominant 3D virtual reality golf simulator company in Korea with 84% market share, an increase from 42% in 2007. 1.2 million members, doubled from 2010. Distribution reach of 5,000 Golfzon stores with over 20,000 simulator installations. Satisfies a critical market gap: lack of golf courses in Korea and especially Seoul (actual golf courses are 2-3 hours drive away from Seoul). Advanced golfers stay away from screen golf due to lack of accuracy, but new VISION product (launched in 2012) a breakthrough to capture all three segments from basic to intermediate to advanced. Transition from hardware to software-based business model (software now ~50% of operating profit) has created uncertainty, but
at a P/E of 11x and virtually no net debt, the valuation is compelling.

About the instructor:

Koon Boon Kee is the founder and managing director of the Singapore-based Bamboo Innovator Institute to establish the thought leadership of resilient value creators around the world. KB has been rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets. He was a fund manager and head of research/analyst at Aegis Portfolio Managers, a Singapore-based investment management organization dedicated to the craft of value investing in Asia. He had been with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-old flagship fund. He was previously the portfolio manager for Asia-Pacific equities at Mirae Asset Global Investments, Korea’s largest mutual fund company. He received his Masters in Finance (magna cum laude) and double degree in Accountancy and Business Management (both summa cum laude) from the Singapore Management University (SMU). He had taught accounting at his alma mater in SMU and published research in the Special Issue of Istanbul Stock Exchange 25th Year Anniversary of the Boğaziçi Journal, Review of Social and Economic Studies, as well as wrote articles about value investing and corporate governance in the media.

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