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Two new video-digital IPOs are scheduled for Thursday, June 27, 2013

Eight other IPOs were scheduled for the week of June 24, 2013. The full IPO calendar is at IPOpremium.

GDC Technology Ltd (GDCT), $75 million

Based in North Point, Hong Kong, GDC Technology Ltd scheduled a $75 million IPO with a market capitalization of $299 million, at a price range mid-point of $13 for Thursday, June 27, 2013.

  • F-1A filed June 12, 2013
  • Manager, Joint Managers: Barclays; Jefferies; Piper Jaffray

Conclusion

First, there appears to be little if any recurring revenue in GDCT's business model.

Second, if Lucas & Spielberg believe the movie theater business is facing an 'implosion', then that implosion could be expected to drag GDCT down with it, even though the P/E multiple of 10.7 times 2012 earnings appears attractive (the business is seasonal).

However, if the market holds stable GDCT may trade near its IPO price. The rating is neutral to negative.

Summary

GDCT has the largest installed based of digital cinema servers for movie theaters. At some point the market will be saturated, of course - not sure when that will happen but as an investor it's not good to overstay the welcome.

Plus, Lucas and Spielberg believe there will be an 'implosion' of the film industry, which would negatively affect, of course, GDCT.

Revenue up, gross margin down
(Indicating price pressure from customers?)

In Q1 '13 gross profit declined to 35% from 41% for Q1 '12, while sales increased 38% to $32 million from $24 million.

Valuation

Based on 2012 results (because the business is seasonal) the P/E multiple is 10.7, but the tax rate is only 15%.

Big Risk: decreases in cinema attendance worldwide could lead to a substantial decline in digital cinema equipment purchases, which could materially and adversely impact GDCT's revenue.

Valuation Ratios

IPO Mrkt

Price /

Price /

Price /

Price /

% offered

annualizing Q1 '13

Cap ($mm)

Sls

Erngs

BkVlue

TanBV

in IPO

GDC Technology Ltd

$299

2.3

14.1

3.2

3.2

25%

P/E based on 2012 results, because seasonal

10.7

Glossary

Tremor Video, $90 million

Based in New York, NY, Tremor Video (NYSE:TRMR) scheduled a $90 million IPO with a market capitalization of $582 million, at a price range mid-point of $12 for Thursday June 27, 2013.

  • S-1 filed June 14, 2013
  • Manager, Joint Managers: Credit Suisse; Jefferies
    Co-Managers: Canaccord Genuity; Oppenheimer

Conclusion

TRMR is a market leader in in-stream video advertising. The stock market loves market leaders with top line revenue growth who are in a growth segment. Buy TRMR on the IPO.

Summary

TRMR delivers in-stream video advertising on behalf of a diversified base of brand advertisers in the United States. Revenue increased 47% to $25 million for Q1 '13 vs Q1 '12, and gross margin increased to 44% from 32%.

TRMR appears to have a current technology lead in the in-stream video ad market, based on performance-based pricing. However, those kinds of leads are seldom fixed in stone.

Valuation

Valuation Ratios

IPO Mrkt

Price /

Price /

Price /

Price /

% offered

Annualizing Q1 '13

Cap
($mm)

Sls

Erngs

BkVlue

TanBV

in IPO

Tremor Video

$582

5.8

-29.1

3.3

4.7

15%

Glossary

Business

TRMR is a leading provider of technology-driven video advertising solutions enabling brand advertisers to engage consumers across multiple internet-connected devices including computers, smartphones, tablets and connected TVs.

Clients include some of the largest brand advertisers in the world including all of the top 10 automakers and 9 of the top 10 consumer packaged goods companies. Relationships with leading brand advertisers and their agencies have helped create a robust online video ecosystem that includes more than 500 premium websites and mobile applications, over 200 of which partner on an exclusive basis.

Proprietary technology

TRMR's proprietary technology, VideoHub, analyzes in-stream video content, detects viewer and system attributes, and leverages our large repository of stored data to optimize video ad campaigns for brand-centric metrics. VideoHub also provides advertisers and agencies with advanced analytics and measurement tools enabling them to understand why, when and where viewers engage with their video ads.

Disclaimer: These GDCT and TRMR summary IPO reports are based on a reading and analysis of their respective SEC filings, referenced above, and a separate, independent analysis by IPOdesktop.com. There are no unattributed direct quotes in this article.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Source: IPO Preview: 2 New Video-Digital IPOs For Week Of June 24th