Investor
Presentation
prepared by Sino Investment Services Pty Ltd
IMF, October 2014: “China No. 1 GDP In the world”
GoConnect, Australian IPTV company now landed in China, the biggest Internet and
mobile market in the world
China stock index to double. GoConnect, your small cap proxy to investing in China
October 2014
Copyright Reserved 2014
Disclaimer
This document is provided for general information purposes only and does not take into
account each person's individual circumstances. Accordingly, no person should rely or act
on the contents of this document, without first obtaining advice from a qualified
professional person. This document is supplied on the terms and understanding that:
1.
Sino Investment Services Pty Ltd (AFSL No. 246936) , its associates, its related bodies
corporate and their respective officers and employees (“SIS”), are not responsible for the
results of any actions taken or not taken on the basis of the information in this document;
2.
SIS is a shareholder of GoConnect Ltd
3.
SIS does not warrant the accuracy, reliability or completeness of such information and
(subject to any statutory liability which cannot be excluded) accepts no responsibility for
any errors or omissions from this document (including by negligence).
4.
To the maximum extent permitted by law, SIS expressly disclaims all and any liability and
responsibility to any person, in respect of anything, and for the consequences of anything,
done or omitted to be done by any such person, whether wholly or partly, as a result of the
contents (whether in whole or in part) of this document.
Demand for China stock funds soars
Rationing of China ETFs Hits U.S. Market as Demand Soars
(Bloomberg news By Boris Korby Oct 13, 2014)
•
The fund managers running the X-trackers Harvest CSI 300 China A-Shares ETF at Deutsche
Asset & Wealth Management are facing a problem their rivals would love to have. They’re
luring too much money.
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In the span of five days last month, the U.S.-based exchange-traded fund pulled in $130
million, sending assets surging by 33 percent to $515 million and nearly exhausting its
Chinese government-imposed A-share purchasing quota. Managers were forced to get
creative. They limited new creations and borrowed quota from another fund to avoid
closing the year-old ETF to inflows and keep a potentially disruptive premium to underlying
assets from developing.
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Their dilemma highlights what’s likely to become an increasingly common predicament as
fund providers from Black Rock Inc. to CSOP Asset Management Ltd. look to follow suit and
open up China’s more than $4 trillion A-shares market to U.S. ETF investors. How should
they handle growing demand for exposure to mainland companies from Industrial Bank Co.
to Gree Electric Appliances Inc. (000651) even as Beijing continues to ration out the quota
foreign ETF providers need?
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Surging demand has been fueled in part by the biggest quarterly gain for mainland stocks
since 2009. The Shanghai Composite gauge rallied 15 percent in the three months through
Sept. 30, even as the MSCI Emerging Markets Index fell 4.3 percent
The Late Barton Biggs formerly of Morgan Stanley
on China stocks, maximum bullish
•
"...Just months earlier, Biggs had returned from an eight-day trip to China (in
1994) and famously declared himself to be “tuned in, overfed, and maximum
bullish.” That had increased the flow of U.S. investment dollars into Hong Kong
at a time when China was a shaky bet. Biggs was not oblivious to the risks of
emerging markets—his weekly reports were clear about the need for
transparency, stability, and caution when betting on countries like China—but
he was also clear about the long-term value of going where the growth would
be."
China Stock Index to double. GoConnect, your small cap proxy
to investing in China
•
China's stock market value is only about 45% of
her GDP, while the US is 115%, UK 123%, Japan
62%, India 68%, Hong Kong 422%, Singapore
144%
•
With China now declared by IMF to be the
largest economy in the world, her stock market
valuation is lagging way behind that of other
Western economies and lagging far behind what
her no. 1 GDP status should command.
•
By internationalising the market with the Stock
Connect Program effective October 2014, the
market capitalisation of China stocks should
expand significantly to better reflect her No. 1
GDP status despite being measured on
purchasing power parity.
China Stock Index to double. GoConnect, your small cap proxy
to investing in China
•
Hong Kong has been a magnet for foreign investors who have used stocks listed on the Hong
Kong Stock Exchange as the proxy for investing in China. Hence the much inflated 422% of
stock value to her GDP. However, it is also a reflection of how popular investing in stocks is
for most Hong Kong people.
•
Hong Kong's extreme % of stock value to GDP demonstrates the serious investor appetite in
China instead. That appetite can now be satisfied by foreign investors investing directly in
the China stock exchange.
•
It is therefore not unreasonable, with foreign capital added fuel by a 50% domestic savings
ratio, to then expect the Shanghai index to double within the next 2 years to 90% of her
GDP but still to lag behind US, UK, Hong Kong and Singapore, but the Shanghai index may
well become the best performing index in the world in the next 2 years.
•
Why 2 years? It took 2 years after Barton Biggs called China stocks maximum bullish to
culminate in the red chip fever. It will take a similar time frame to develop the next red chip
fever. This next red chip fever will have a strong flow on effect to most stocks with strong
China focus on Western stock exchanges, similar to the experience of the 1996/97 red chip
fever around the world. Watch the China stock boom virally unfold. China stock boom will
spread and be highly contagious.
The essential GoConnect (GCN)
•
GCN is an ASX-listed internet media company, a pioneer in IPTV, and is one of Australia’s largest
independent music and online media companies operating its 100% owned IPTV entertainment
channel (uctv.fm).
•
•
•
•
uctv.fm distributes content to:-- 100 million + LG connected TV households worldwide
-- all brands of smartphones
-- web TV.
•
Go JLJ Entertainment (GCN 40%) in conjunction with Sohu.com, and a national satellite TV
broadcaster, promoted by China National Mobile Digital TV Network, will broadcast the JJ5
reality TV music contest in 2014 to a potential audience of up to 1 billion viewers in China and via
LG connected TV to the rest of the world.
•
The JJ5 reality TV music contest will be supported by a number of Michael Jackson fan clubs
including (http://www.mjjasia.com) in China with 130,000 registered members with significant
viral marketing potential.
•
GCN owns 100% of Undercover.fm- Australia’s leading online music news and information portal.
Investor Information
•
•
•
Total fully paid ordinary shares on issue: 978,514,133
Unlisted Options: 27 million exercisable @2c.
Market capitalization: AUD$11.7 million (@1.2c) ( 13th Oct, 2014)
NAME
MILLION
% of
UNITS
1. SSI NOMINEES
83.8
8.57
2. LEET INVESTMENTS
52.2
5.33
3. CITICORP NOMINEES
50.6
5.17
4. SINO SECURITIES INTERNATIONAL
35.8
3.65
5. LEET INVESTMENTS <SUPERNNAUTION
FUND A/C>
33
3.37
6. HSBC CUSTODY NOMINEES
32
3.27
7. SSI NOMINEES <NO 2 A/C>
28
2.87
8. GENERAL & PRIVATE FUNDS MANAGEMENT
20
2.07
9. JP MORGAN NOMINEES AUSTRALIA
18
1.71
10. BAINTON
15
1.55
TOTAL
37.56
•)
GoConnect Comparable Valuation
a significant under-valuation
•
uctv.fm is free, on-demand , advertising funded and is increasingly becoming recognized
as an effective marketing medium which is taking market share from Free to Air (FTA)
television networks.
•
GCN believes that TV consumers will increasingly switch to free on-demand IPTV to watch
programs when and where they choose, away from linear FTA or linear pay TV. This shift
could build such momentum as to ultimately threaten the viability of FTA and linear pay
TV.
•
GCN via LG connected TV, Blu-Ray Players and Set-top boxes can already reach 100
million households and via its 40% owned Go JLJ Entertainment upon launching JJ5
Music Competition in China could access an additional 1 billion people viewers. This will
create the largest and most accessible global audience for music and entertainment.
•
GCN has other assets which include Go JLJ Entertainment (GCN 40%), Ecoconnect (GCN
100%), and Jermajesty Holdings (GCN 20%).
GoConnect Comparable Valuation
a significant under-valuation
•
The valuation of GCN can be extrapolated based on GCN’s LG connected TV household audience reach at
100 million currently from the market cap per FTA TV audience (traditional media) to A$70.4/share, or it can
be implied based on Twitter and Facebook value per audience member (new media), to be equivalent to
A$12.30/share as per Twitter or A$15/share per Facebook. These values do not take into account the GCN
audience reach through JJ5 music competition in China (up to 1 billion viewers) and audience reach globally
through smartphones. They also do not account for value from free WiFi, Gotentv.com, Ecoconnect Australia,
Jermajesty Holdings, etc.
•
The value of the LG audience reach will become more apparent as JJ5TV China is launched on LG connected
TV.
•
For conservatism, however, we have discounted these numbers by 90% and conclude that GCN should carry a
value range of between A$1.23 and A$7.04 per share currently.
Board of Directors
•
Richard Li – Executive Chairman
Richard was the founder of GCN in 1999 and established GCN as the first IPTV company in
Australia in 2000 before IPTV was even defined .
•
Philip Chan – Non-Executive Independent Director
Philip has more than 40 years experience as a director and producer in the entertainment
industry in South East Asia, promoting many artists into superstardom.
•
Jermaine Jackson – Non-Executive Independent Director
Jermaine Jackson is an American singer, bass guitarist, composer and film director. Jermaine
has substantial interests in various music related businesses and is chairman/major shareholder
of Jermajesty Holdings Pty Ltd and Go JLJ Entertainment Pty Ltd which are both in partnership
with GCN.
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Joe Fekete – Non-Executive Director/Company Secretary
Joe was the finance director of J Walter Thompson and Simon Richards Group and also worked
at Campaign Palace. Joe is an experienced professional who has gained his experience in areas
of statutory reporting, accounting, system development, restructuring and general business
management from the Board Room to the Shop Floor.
Internet Protocol Television (IPTV)
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Uctv.fm distributes music and entertainment content to a global audience via IPTV.
•
Distribution is through a multi-platform strategy via:
- Web TV via PCs
- Internet connected LG TVs and LG internet connected devices
- Smartphones
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This multi-platform strategy is supported by distribution agreements with strategic and
well established industry partners.
•
Industry sources indicate that unit sales of internet connected TVs are growing at
double-digit compound annual rates and that within 5 years virtually all TVs sold will
be internet connected.
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Anywhere IPTV accessed via smartphone is expected to become the media platform of
choice for accessing information and entertainment for users on the move. Facebook
reports that over 80% of its 1.1 billion users already access Facebook via smartphones.
Go JLJ Entertainment Pty Ltd
a significant income and cash generator for GoConnect
•
GoConnect has formed a strategic partnership with Jermaine Jackson of Jackson 5 fame.
GoConnect provides its global IPTV distribution platforms to market his business.
•
GoConnect Australia Pty Ltd ( GCN 100%) owns 40% of JLJ Entertainment Pty Ltd.
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Go JLJ Entertainment aims to create, develop, produce and deliver high quality entertainment in
new ways for a global market.
•
Jermaine and his partners will present his first Reality TV Music Competition through Go JLJ
Entertainment, his development and production venture for creative multi-platform content. The
new TV Show will be called ‘JJ5’ and will be broadcast on Sohu.com’s various online platforms, on
China National Mobile Digital TV Network, and on a national satellite TV network. The show will
also be broadcast on GCN’s IPTV network. Total audience for JJ5 is estimated to be up to 1billion
people.
Mission Statement
“Content is King”
Go JLJ Entertainment is designed to deliver compelling entertainment
to global consumers in the most innovatively comprehensive way
possible. The goal with this company is to create, develop, produce
and deliver high quality entertainment in new ways and at a
paradigm shifting pace.
Shareholders of Go JLJ
Entertainment
The Business of Go JLJ
Entertainment
Go JLJ Entertainment
- An international entertainment production and marketing
company that was established by the legendary Jermaine
Jackson and his wife Halima Rashid who also has significant
relationships in Bollywood. They, together with the US
entertainment power broker Dirk Gibson, and ASX listed IPTV
company GoConnect, spotted the emerging online interest in
Western entertainment content in the China market almost a
year ago and since then has been preparing for the 2014-2015
launch of a multi-part multimedia event called “Jermaine
Jackson Presents”.
The Business of Go JLJ
Entertainment
•
-
Jermaine Jackson Presents
Go JLJ is working closely with Sohu.com, and DDB China, one of the top 10 advertising
agencies in China, to secure sponsorships and for DDB China to manage the overall
advertising and sponsorship sales.
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Includes two related TV shows, the JJ5TV China music competition and reality TV show, and a
movie based on the best-seller book of Jermaine Jackson “You are not alone Michael through
a brother’s eyes”.
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Official mandate has been granted by Sohu.com and Go JLJ Entertainment to DDB China to
represent the two companies for advertising and sponsorship sales re Jermaine Jackson
Presents. A number of major brands have already shown strong interest to be sponsors. DDB
has a number of major international brands in their client portfolio including Pepsi, GM, VW,
McDonald, ANZ Bank, P&G, etc.
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Go JLJ Entertainment is now implementing an exciting plan for this incredible original content
event cross China. The event will be co-produced by Go JLJ’s US management and a major
national satellite TV company with strong experience in conducting music competition reality
TV shows.
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The plan will involve distribution and promotion of “Jermaine Jackson Presents” through
social media in partnership with Sohu.com, and China’s national outdoor digital TV network.
The Business of Go JLJ
Entertainment
• Entertainment content division
-
With Jermaine Jackson Presents on the launch pad, Go JLJ Entertainment is now
preparing to implement the next phase of its comprehensive foray into China with
original and Western entertainment content by unveiling a new division.
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Go JLJ Entertainment has the ability to channel Western entertainment content and
access to celebrities for the China online and in particular social media market.
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This division will focus on Western entertainment content that has particular relevance
to the China online market. Go JLJ will be able to capitalize on GoConnect’s long
experience and expertise in IPTV on all 3 screens of desktop TV, smartphone TV, and
connected TV, and on GoConnect’s established relationships in China.
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Western entertainment content providers will be able to use Go JLJ Entertainment to
fast track their entry to the lucrative China online market which, with over 600 million
online users, is easily the biggest single online market in the world.
Contents and Connections,
who you know: Jermaine
Jackson
•
Music: the Jacksons , Janet Jackson, 3T , Jaafar and Jermajesty , Austin Brown ,
Kool and the Gang ,Bruno Mars, Chris Brown , Black Eye Peas, Stevie Wonder, Jay
Z, Beyonce & Acon , Lady Gaga, Justin Timberlake, Lil Wayne, Snoop Dog, etc.
•
Hollywood actors: Eddie Murphy, Samuel L Jackson, Denzel Washington, Chris
Tucker, Angela Basset, etc.
•
Production companies: E! and Bravo, Bunim-Murray Productions,Oprah Winfrey
Network.
•
Jackson branded titles: Jacksons TV movie, THE JACKSONS AN AMERICAN
DREAM, JACKSON FIVE CARTOON SERIES.
•
Bollywood: access to all the top Bollywood stars, producers and directors.
It’s who you know in the world
of entertainment
• Go JLJ has secured rights to and/or has access to Original Content
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From Stan Lee : Creative force of Marvel Comics
From Tyler Perry: Medea movie franchise, Meet the Browns etc.
From George Lopez: St. George, Lopez Tonight , etc
From Jermaine Jackson: Jackson 5 Cartoon, Jackson Family Brand, etc
From Jerry Bruckheimer: Pirates of the Caribbean, CSI, Amazing Race, etc
From Mark Brunett: Survivor, The Voice, etc
From David Lettermen: Everybody Loves Raymond, King of Queens, etc
From Chris Tucker: Star of Rush Hour with Jackie Chan
Michael Jordan: Sports themed content
Charls Barkley: Sports themed content
Dion Sanders: Sports themed content
Shaquille O’Neil: Sports themed content
Tiger Woods: Sports themed content
Lorne Michaels: Saturday Night Live, Tonight Show, Above Average, etc
Tim Allen: Tool Time, Buzz Lightyear, etc
Ben Silvermen: The Office, Biggest Loser ,etc
Adam Sandler: Hotel Transylvania, Grown Ups, etc
Rick Cleveland: Writer of Six Feet Under, West Wing, House of Cards, etc
Existing Studio/TV network
Connections
Lionsgate Studios
NBC
Discovery
Spike
Universal Studios
FOX
History
TV Land
Paramount Studios
ABC
A&E
Comedy Central
Warner Brothers
CBS
truTV
FX
Disney
CW
REELZ
USA
MGM
TNT
Discovery
DC Comics
Comcast
TBS
MTV
Hulu
Sony
HBO
VH1
Fox Sports 1
Go JLJ A-Team: Trusted Hollywood
relationships built over 50 years
•
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Jermaine Jackson – Chairman
Jermaine LaJuane Jackson is an American singer, bass guitarist, composer, member of
The Jackson 5, and occasional film director. Jermaine has substantial interests in
various music related businesses and is the director of GoConnect Ltd, and
director/major shareholder of Royal Empire music and Go JLJ Entertainment Pty Ltd.
•
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Richard Li – Director
Over 30 years in investment banking, equity funds management, investment advisory
service and stock broking with major Australian institutions. Richard has been involved
with ASX public company management since mid 1987. He is founder and Executive
Chairman of ASX listed GoConnect Ltd who owns 40% interest in Go JLJ entertainment
•
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Dirk Gibson – Director
Dirk Gibson is the President of Inspired Entertainment, a Development and Production
Company incorporated in Los Angeles, CA. Dirk is represented by Andrew Miller,
Creative Artist Agency, (CAA) for scripted projects and Rosanna Bilow, CAA for nonscripted projects. Dirk is also represented by a team of leading industry attorneys
including Neal Tabachnick at Wolf, Rifkin, Shapiro, Schulman & Rabkin, LLP.
Financial Projections: Go JLJ
•
GoConnect has been supportive of the business of Go JLJ with its technical, accounting and financial resources. In 2014, Go JLJ
Entertainment has embarked on a substantial project in China, “Jermaine Jackson Presents”.
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“Jermaine Jackson Presents” will be marketed and distributed on multiple platforms in China: online on Sohu.com’s various
platforms, on a national satellite TV network, and on a national network of over 100,000 outdoor digital TV screens.
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The total audience size is estimated to be up to 1 billion people. Add to this Chinese audience is an additional 100 million LG
connected TV households around the world outside of China on GoConnect’s IPTV network uctv.fm.
•
Cost of operation, production, marketing and overheads of “Jermaine Jackson Presents” (excluding the movie based on the
book written by Jermaine Jackson) is estimated to be about US$12 million.
•
On Revenue, we benchmark “Jermaine Jackson Presents” against Voice of China 2013. Unlike Voice of China, which is a recent
phenomenon, the Jackson 5 brand has been built up over 50 years with millions of Chinese fans supporting Michael Jackson.
“Jermaine Jackson Presents” audience is expected to exceed that of Voice of China 2013 season, which was reported to be
120 million on TV and 400 million online. We estimate that Voice of China 2013 generated over US$100 million in advertising
and sponsorship revenues. In 2014, based on 2013 audience size, we expect Voice of China to generate about US$200 million
in similar revenue.
•
Therefore, we estimate “Jermaine Jackson Presents” to generate advertising and sponsorship revenues of about US$150
million over the next 12 months excluding merchandising and music rights revenues.
•
Of total estimated revenue, we expect Go JLJ Entertainment to keep about 60% or US$90 million. “Jermaine Jackson
Presents” is estimated to provide about US$78 million net pretax profit to Go JLJ Entertainment after costs and other
overheads. 40% of this will be attributable to GoConnect or US$31.2 million. This is about 3 times GoConnect’s current
market capitalization of A$12 million at A$1.2 cents per share on the ASX.
Jermajesty Holdings Pty Ltd
a significant asset play for GoConnect
•
Jermajesty Holdings (GCN 20%) is a hospitality and entertainment group co-founded by the
legendary Jermaine Jackson and GoConnect. Jermajesty Holdings will own and manage 5 and 5-star
deluxe Jermajesty Hotels & Resorts around the world.
•
Jermajesty Holdings will generate hospitality/entertainment management income and capital
growth via ownership in whole or in part directly or indirectly of properties. Jermajesty Holdings
will co-invest in properties either directly with international investors or via the Jermajesty
Hospitality REIT which is presently under development with international investment institutions.
•
Subject to independent valuation, Jermajesty Holdings' 50% of the Project land of 660,000 sq
meters, secured at the Dalian New Airport now re-zoned as part of the Special Economic Zone,
could be worth about $300 mil or 30 cents per share for GoConnect's 20% interest in Jermajesty
Holdings.
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Jermajesty Holdings has also secured a free carried 25% interest in a US$200 million investment in
the Tianjin Arts and Entertainment Centre development, worth at least US$50 million to Jermajesty
Holdings or US$10 million to GoConnect, equivalent to 1 cent per share.
Web TV
uctv.fm
•
uctv.fm features original content
produced by GoConnect and also
content from third party content
providers.
•
GoConnect can exploit its content
licenses globally via IPTV, giving the
company an advantage over traditional
media operators which are restricted
by territorial licenses.
Smartphone IPTV
uctv.fm
Connected TV
uctv.fm
•
uctv.fm is distributed to more than
100 million LG connected TV
households worldwide via LG TVs,
Blu-Ray players, and set-top boxes.
•
uctv.fm was LG’s first Australian
content partner since 2011.
undercover.fm
•
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undercover.fm, is highly respected
within the entertainment industry for
its wealth of proprietary content and
quality editorials.
The future lies in expanding the
undercover brand name by exporting
the business model into other
geographical regions to establish local
versions of undercover.fm in USA,
Europe, MENA Region and Asia.
GoConnect has licensed undercover.fm
to Centurion Securities and Investment
Services for$5 million up front payable
in soon to be listed Priority One shares
plus $5 million in cash or Priority One
shares by 30 June 2015. The total of
$10 million represents another 1 cent
per share value to GoConnect.
The $10 million licence fees will
transform GoConnect's 2014/15
financial results, both in profitability
and shareholders funds.
EcoConnect Australia
•
GCN owns100% of EcoConnect
Australia ,an online retailer of
solar thermal hybrid air
conditioning systems.
•
EcoConnect Australia has plugged
into a strong, established
infrastructure for national
distribution, installation, warranty
and after sales support of solar
thermal air conditioning products.
-Soundcheck –
Music Industry B2B Platform
•
B2B platform for music industry
participants, such as JJ5 in China.
•
Promoted virally and traditionally
through music/entertainment
businesses, and associates.
•
Designed to recruit registered
members and visitors from the
global music and IPTV media
industries.
•
Generates revenue from
ecommerce/online ads and
sponsorships.