KUALA LUMPUR (Nov 18): Foodie Media Bhd’s listing price overvalues the social media content creator as its earnings growth comes under pressure from rising competition and costs, said Tradeview Research.
The company will likely see only single-digit growth in revenue over three financial years while gross margin will likely shrink from rising expenses from a massive increase in workforce and growth plan that relies on expansion into low-margin segments, the research house flagged.
“We question the scalability of this plan given intensifying competition,” Tradeview said. The house also raised concerns including the sustainability of current live-commerce commission rates and limited short-film production capacity.
A fair value for Foodie Media would be 27 sen, a 10% downside from its initial public offering (IPO) price of 30 sen per share, according to Tradeview.
Foodie Media, which commands 46 million social media followers, is seeking to raise RM41.4 million from the IPO. More than half of the proceeds have been earmarked for the recruitment of nearly 200 staff.
However, the expanded workforce will raise fixed operating costs, and the additional headcount is likely to pressure margins if the company fails to secure a proportionate increase in project wins, Tradeview cautioned.
Meanwhile, content featuring shop owners rather than personality-driven influencers weakens pricing power, and rising competition from domestic and foreign creators will likely pressure service fees, the research house said.
As competition among online commerce platforms continues to intensify, platforms have been lowering commission charges to sellers, and to offset this revenue decline, they are also reducing affiliate commission payouts to creators like Foodie Media, the house noted.
Further, production capacity of short films remains limited at up to six dramas annually while requiring a long construction timeline, carrying execution risks, Tradeview added.
Applications for the IPO will close on Nov 19, and listing has been scheduled for Nov 28.