Weathernews Inc. (MV $320m): World’s #1 Weather Information Services Company
ROE 27.2% and trading at EV/EBIT 9x, EV/EBITDA 7.5x
Weathernews Inc (TYO: 4825) is the CNN/Bloomberg of weather as the world’s largest and most comprehensive private weather information services company, providing customized mission-critical weather information with a recurring-income “toll-gate” business model to help its worldwide customers to access accurate and timely weather information to make better decisions in a world with abnormal weather accelerating. In its B2B business (57% of sales), Weathernews provides Total Fleet Management Service (TFMS) with optimal ship routing, performance monitoring, safety status monitoring for over 2,000 shipping companies from 31 offices around the world and commands a 90% domestic market share and 35% global market share (7,000/20,000 vessels). The B2B business also helps multiple industries that range from sea (shipping, fishery, oil & gas) to land (road management, railway, logistics, retail, local government) and sky (aviation). In its B2S business (43% of sales), Weathernews designs and produces weather programs for radio, TV, digital media, including digital signage with original weather content for train stations, airports, elevators building lobbies, vending machines and restrooms. Weathernews provides content for over 90 commercial broadcasting stations in Japan (80% share of the Japanese market) and for over 200 cable television station in Japan reaching 15 million households, as well as for Hong Kong and Taiwan satellite broadcasts. The B2S business also co-creates user-generated and crowdsourced weather information for its 20m users/”supporters”, of which 2.5m pay around US$2-3 per month for premium version of the service. Weathernews was established in 1986 by Hiro Ishibashi after an MBO of the Japan office of US Oceanroutes and the former parent was acquired by Weathernews in 1993. Weathernews was listed on Jasdaq in 2000 and was upgraded to the First Section of Tokyo Stock Exchange in 2003. The Ishibashi family and management owns 44.6% of the company.
1) What Makes It a Wide-Moat Business?
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About The Author: Koon Boon Kee
Koon Boon is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets.
Starting his career at a boutique hedge fund in Singapore and later, at Korea’s largest mutual fund company, Koon Boon started to make headway into the investment arena. In his early successes, Koon Boon was part of the core investment decision committee which achieved 700% in returns (net of fees), in its flagship Asian fund.
A prolific writer and thought leader, Koon Boon has contributed hundreds of articles to Bamboo Innovator and BeyondProxy, an acclaimed series of subscription-based, research-intensive publications for serious investors; and is Managing Editor of the Moat Report Asia, a research service focused exclusively on highlighting undervalued wide-moat businesses in Asia. He had also presented in top banking and finance conferences in Sydney, Cape Town, HK and Beijing, as well as in the Emerging Value Summit and Wide Moat Investing Summit. His work has been featured in local and international media such as, TEDxWallStreet, Investopia, BeyondProxy, Greatinvestors.tv, Jakarta Post, Straits Times Singapore, TODAY Singapore, Business Times Singapore, as well as a publication in the BoğaziçiJournal.
With the wide occurrences of financial fraud committed by listed firms in China during 2015, Koon Boon went to further his studies, from which he saw a gap in the curriculum for accounting fraud. He went on to pioneer the first-of-its-kind course on Accounting Fraud in Asia, which is now an official course in the SMU curriculum.
Today Koon Boon is the Chief Investment Officer at 8I Holdings Limited, where he is responsible for the sustainable growth and outperformance of listed Asian equities investments in the Hidden Champions Fund.
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