Global Sources (GSOL) is a Hong Kong based business to business (B2B) media company. The company facilitates trades between the Greater China to the world. Global uses a wide range of English Language and Chinese Language to facilitates trade from China to the rest of the world. Global provides sourcing information to volume buyers and integrated marketing services to suppliers.
Company History
It was founded in 1970 by Merle A. Hinrichs and C. Joseph Bendy as Trade Media Ltd. The company's first publication "Asian Sources" magazine was launch three month later. In September 1974, the company's first spin-off magazines "Asian Sources Electronic" appeared. As the company grew more industry specific titles were added. The company launched the industry's first business to business website "Asian Sources Online" and its monthly CD-ROW. Global did this to supplement and enhanced their trade publications. In 2003 the company launched its China Sourcing Fair and since then these specialize export fairs bring together international buyers with China and Asian exhibitors. Today the company more then 1 million international buyers and 95 out of 100 top retailers in the world use the company's services.
Business Operations
The company operates a number of trade magazines that help importers to connect with Asia suppliers. It has successfully transitioned its business and assets to the web over the last few years. Global most interesting segment is its exhibits or trade show group, bringing together buyers and sellers from around the world. Sells from this segment has risen from $70 million in 2010 to $86 million in 2013. These segments together are cash cows, which has lead to double digit return on equity and assets over the last decade. The company has $4.28 a share in cash on the balance sheet.
Tender Offer
Global announced that it would buyback $50 million worth of shares for $10 per share. This only requires the company to use one-third of its net cash position. This isn't the most common way to return capital to shareholders but this method results in capital gain rather than dividends. This seems to be the company's favorite method to return capital to shareholders. In 2010 the company did something similar by buying paying a $100 million to repurchase share at $9 per share.
Valuation
I
n the last four quarters the company earned $21 million plus $15 million from real estate sale. Not taking in to account real estate and cash the company trades at a P/E of 6. It has about $4.28 per share in cash on the balance sheet. The company $10 per share tender offer, offers investors a 25% return on there investment on a two-month period.
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