Profile of Global Sources (2008)

A first edition of this report was published in December 2006. This update has been almost complete re-written and includes information from Global Sources' most recent financial statements and analysts briefing which took place on 11th March 2008.

Global Sources: Company Background

Founded in 1970 by Merle Hinrichs, Global Sources, formerly Asian Sources, has long been a key media group supporting consumer merchandise sourcing in Asia. The company provides buyers with information on products and suppliers, while it provides manufacturers with marketing services. Global Sources is particularly focused on the Chinese market. In China, Global Sources currently has over 2,100 employees in 44 locations, a figure set to expand substantially.

Global Sources creates and hosts a supplier's product and company information on its flagship website. Its 13 trade magazines consist of supplier advertisements and independent editorial content. Some of Global Sources titles include Gifts & Premiums, Electronics and Fashion Accessories. In 2003, the company launched a line of trade shows branded, China Sourcing Fairs. These trade shows bring together Global Sources readers and advertisers. The company also controls a joint venture, eMedia Asia Limited, which is a 60:40 partnership with TechInsights (formerly CMP Media) to produce electronics industry titles.

The timing of Global Sources' NASDAQ listing (ticker: GSOL) in March 2000 unfortunately coincided with the dotcom collapse. Global Sources trades at a current valuation of approximately US$670 million or nearly 22 times earnings. It was volatile year for the company's stock price, but that was largely driven by two external factors: the general run up of share prices in the wider market and the massive amount of press generated by Alibaba.com's IPO. The stock price started 2007 at approximately US$17. It then peaked in October at more than US$35 in the lead up to the Alibaba.com IPO before falling, along with the rest of the market, down nearly 70% to less than US$11 in early March this year.

For the year ending 31 December 2007, Global Sources recorded revenues of US$182 million - a 16% increase over 2006 revenues. Online revenues grew 11% and revenues from the company's exhibitions operations were up 22.5%. The company has nearly US$200 million in cash and no debt. GAAP net income in 2007 was US$24 million or US$0.51 per diluted share - down 15% from the US$0.60 recorded in 2006. Earnings were driven lower by the management's decision to write down the entire US$3.1 million investment in Blue Bamboo and by a US$7.8 million expense in non-cash compensation. The company is forecasting revenues of between US$101 million and US$102.5 million in the first six months of 2008.