Thank you for sharing your thoughts on this, and it provide me more clarity on the current stock situation. Based on the IPO prospectus and the current company financial performance, Renrui's performance is not too far off from the initial forecast despite this black swan event. May i know if you still have a position in Renrui? What are your thoughts on Renrui since it had since been a year the black swan event happened?
Yes, I still have the position and in fact I added to it recently in Q2 2022 at around HKD 6.1 per share. I believe the company is way undervalued at the current price. There are two key questions I ask myself - one is "after the black swan event has happened, has the management team executed well and continues to grow?"; the other question is "assuming that the black swan event is indeed an one-off event, in two parallel universes, will I have a stronger buy conviction in one with Bytedance as a customer at HKD 25 per share vs. one without Bytedance as a customer at HKD 6 per share?" The answer is pretty clear to me, the risk of owning the stock is much lower now compared to before, hence I buy more. Having said that, I will continue to look out for 1) management execution against what they have said; 2) margins for various segments going forward; 3) economic recession and hiring freeze. One thing I don't like is the lack of share buyback or insider buys at this price (though it could be due to the extreme low liquidity).
Thank you for sharing your thoughts on this, and it provide me more clarity on the current stock situation. Based on the IPO prospectus and the current company financial performance, Renrui's performance is not too far off from the initial forecast despite this black swan event. May i know if you still have a position in Renrui? What are your thoughts on Renrui since it had since been a year the black swan event happened?
Yes, I still have the position and in fact I added to it recently in Q2 2022 at around HKD 6.1 per share. I believe the company is way undervalued at the current price. There are two key questions I ask myself - one is "after the black swan event has happened, has the management team executed well and continues to grow?"; the other question is "assuming that the black swan event is indeed an one-off event, in two parallel universes, will I have a stronger buy conviction in one with Bytedance as a customer at HKD 25 per share vs. one without Bytedance as a customer at HKD 6 per share?" The answer is pretty clear to me, the risk of owning the stock is much lower now compared to before, hence I buy more. Having said that, I will continue to look out for 1) management execution against what they have said; 2) margins for various segments going forward; 3) economic recession and hiring freeze. One thing I don't like is the lack of share buyback or insider buys at this price (though it could be due to the extreme low liquidity).