Wonderful Sky: Unusually Entrenched, Owner-Operated Hong Kong PR Firm

Omar Musa presented his in-depth investment thesis on Wonderful Sky (Hong Kong: 1260) at Wide-Moat Investing Summit 2017.

Wonderful Sky is the leading financial public relations firm in Hong Kong. The company was founded in 1996 by Chairman Liu Tianni to provide PR services to corporates going public on the HK stock exchange. The company has 35% market share by number of listings and 70% market share by amount of funds raised. In 2016, each one of the top ten IPOs in HK enlisted Wonderful Sky as its PR advisor. With only one chance to IPO and the cost of PR being a small fraction of total IPO costs, Wonderful Sky has become the standard for financial PR in HK. Following the IPO, the company continues to provide recurring PR services that make up nearly two-thirds of revenue and highlight its extremely high customer retention. Since 2009, Wonderful Sky has compounded earnings at 27% a year with little invested capital. It recently had one-half of its market cap in cash and investments, with the shares selling for 6.5x earnings ex-cash. Insider ownership is 60+%. The company pays generous dividends and occasionally repurchases stock.

Omar Musa is the managing partner of Perea Capital, a global value-oriented investment partnership. Prior to founding Perea Capital, Omar spent time in a family office in Texas and at First Eagle Investment Management in NYC, where he worked under Bruce Greenwald and Jean-Marie Eveillard. Omar has an undergraduate degree in economics from Harvard College, magna cum laude, and was named a John Harvard Scholar, an honor awarded yearly to the top 5% of the class.

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