Cerebration Duke Bd Ventures Final
description
Transcript of Cerebration Duke Bd Ventures Final
![Page 1: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/1.jpg)
Bobby Brenman
Vishal Patel
Anupam Bhandari
Kyle Gardner
CEREBRATION 2009
![Page 2: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/2.jpg)
Objective:Increase profits in next 2-4 years building long-term value
![Page 3: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/3.jpg)
ChallengesStrategyImplementationFinancial Analysis
Agenda:
![Page 4: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/4.jpg)
Global Economic Crisis
Increasing Competition
Customer Preferences
Personalization
One-stop shop
Information
Best deal
![Page 5: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/5.jpg)
What can we control?
![Page 6: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/6.jpg)
Expansion Strategy
![Page 7: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/7.jpg)
1111 Focus on core geographies
2222
3333
Expand user base
Improve user experience
Strategy
![Page 8: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/8.jpg)
Value Knowledge &Relationships
![Page 9: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/9.jpg)
1111 Focus on core geographies
Strategy
![Page 10: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/10.jpg)
Singapore
China, Hong Kong, Macau
Philippines
Malaysia
Thailand
Indonesia
6 core geographies
![Page 11: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/11.jpg)
Country Projected Travel Increase 2008-2012
% Originating from Core Region
(Source Markets)Singapore 26% 68%
China 26% 58%Hong Kong 19% 62%Philippines 52% 16%Malaysia 61% 72%Thailand 32% 25%
Indonesia 46% 45%
![Page 12: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/12.jpg)
30%Growth by 2012
![Page 13: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/13.jpg)
2222 Expand user base
Strategy
![Page 14: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/14.jpg)
Leisure
+Unmanaged
Business
![Page 15: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/15.jpg)
>S$ 4 B >6%
Unmanaged Business
Market Size
CAGR 2008-2012
![Page 16: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/16.jpg)
Partnerships
White label
VS. Branded
![Page 17: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/17.jpg)
3333 Improve user experience
Strategy
![Page 18: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/18.jpg)
Enhance Create
![Page 19: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/19.jpg)
Asia Pacific
1.52 B
Mobile Opportunity
2008
19%CAGR
![Page 20: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/20.jpg)
1111 Focus on core geographies
2222
3333
Expand user base
Improve user experience
Strategy
![Page 21: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/21.jpg)
Measuring Success?Feasibility
Increase number of users
Spend responsibly
Increase profits
Increase long-term value
![Page 22: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/22.jpg)
Implementation Plan
Technology ▪ Marketing ▪ People
![Page 23: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/23.jpg)
Technology
![Page 24: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/24.jpg)
Search Engine Optimization
SEO Paragraph
Site Map
Backlinks
Increase website traffic
![Page 25: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/25.jpg)
MyAsiatravel.com
Recommendations Dynamic Packaging Loyalty Program Localization Social Features
Improve user experience
![Page 26: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/26.jpg)
Instant information Instant purchasing Access anytime
Mobile ChannelIncrease accessibility and convenience
![Page 27: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/27.jpg)
Summary
Feasibility
High
LowHighLow
MyAsiatravel.com
![Page 28: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/28.jpg)
Marketing
![Page 29: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/29.jpg)
Objectives
Enhance brand equity
Deliver value to core demographics
Gain competitive advantage
![Page 30: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/30.jpg)
Asiatravel.com is losing visitor share
![Page 31: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/31.jpg)
One-stop travel solutionNew positioning:
Company One-stop Flights InventoryInstant
ConfirmationBusiness
Travel
Asiatravel.com + + + + -
Agoda.com - - + + -
Asiarooms.com - - + + -
![Page 32: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/32.jpg)
ChannelsOnline
Offline
80%
20%
Search engine marketingBanner adsPromotions
PrintConventionsTourism bureaus
Conversion
Awareness
![Page 33: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/33.jpg)
Expand Partnerships
Photo sharing
Destination sites
Travel ServicesTravel Services Social NetworksSocial Networks
QQ.com
Facebook.com
![Page 34: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/34.jpg)
People
![Page 35: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/35.jpg)
Maintain local sales forceMerchant relationshipsLocal knowledgeSupport
Local Offices
Expand sales team knowledge Business traveler knowledge Business specific resources
![Page 36: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/36.jpg)
Centralize non-salesMarketing
Technology
Operations
Realign regional SVPs
Create new positions
Align people to maximize long term valueMain Office
Overall efficiency
Best practice sharing
Potential cost savings
Implementation
![Page 37: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/37.jpg)
Proposed Structure
![Page 38: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/38.jpg)
Implementation TimelineSearch Engine Optimization
Launch MyAsiatravel.com
Launch Mobile Channel
Launch Unmanaged Business Traveler Services
Launch New Marketing Message
Improve Channel Marketing
Organization Realignment
0 1 2 3 4
2 years
1.5 years
1 year
6 m
3 years
2 years
6 m
![Page 39: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/39.jpg)
Successful StrategyFeasibility
Increase number of users
Spend responsibly
Increase profitability
Long-term value
![Page 40: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/40.jpg)
Financial Analysis
![Page 41: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/41.jpg)
Financial Strength1) Strong cash reserves
2) Commitment to shareholders
3) Increasing profitability
![Page 42: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/42.jpg)
*Assumptions: 5% terminal growth rate, 10.31% discount rate
Increase market value
S$ 30.4MM
![Page 43: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/43.jpg)
Revenue Growth
Key AssumptionSignificant slowdown in 2009-2010
![Page 44: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/44.jpg)
Long-Term Profitability
Key Assumption: Declining Gross Margins (2% Annually)
![Page 45: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/45.jpg)
Leisure Remains Principal Segment
80.6%
15.3%
4.1%
Percentage of Revenue: 2012
Leisure
Unmanaged BusinessMobile Distribution
![Page 46: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/46.jpg)
Product InvestmentsAnnual Capital Investments (S$’000)
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
2009 2010 2011 2012
Online Leisure Unmanaged Business Mobile Distribution
![Page 47: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/47.jpg)
Significant Returns
![Page 48: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/48.jpg)
Grow Cash Balance
![Page 49: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/49.jpg)
Financial SummaryResponsible spending
Positive ROI investments paid back within 5 years
Growing cash balances
Increase profitability
27% revenue growth
Profits > S$10MM by 2012
Long-term value
Market value increases 56%
![Page 50: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/50.jpg)
Conclusion
![Page 51: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/51.jpg)
Core Regions User base User experience
S$30.4MMIncrease Value
![Page 52: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/52.jpg)
Reinforcing system
Referrals
User base Site Traffic Sales
PartnersProfits
Long term value
![Page 53: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/53.jpg)
Successful StrategyFeasibility
Increase number of users
Spend responsibly
Increase profitability
Long term value
![Page 54: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/54.jpg)
CEREBRATION 2009
Thank youTerima kasih
![Page 55: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/55.jpg)
AppendixStrategic Implementation
SWOT Analysis SEO Examples
Environmental Analysis Considerations
Transnational Matrix Recommendation
Market
Core Region Analysis Cost Cutting Measures
Global Departures Financial Summary
Online Booking Trends Sources Consulted
Customer Segment Analysis
Key Population Trends
![Page 56: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/56.jpg)
SWOT Analysis
Strengths Weaknesses
• Strong merchant model• Brand recognition• Strong partners• Strong balance sheet• Established offices in 6 core geographies
• Website less developed than competitors• Value proposition not clear• Brand not recognized outside region
Opportunities Threats
• Mobile channel• Business travel segment• New partnerships• Evolving user needs
• Global recession• Merchant model phasing out• Increasing competition
![Page 57: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/57.jpg)
Demographic TrendsAging population while median age stays the same
Macroeconomic ImpactsEconomic downturn and financial crisisGrowing middle class seeking to travel
Socio-Cultural InfluencesIncreasing online usageAcceptance of e-commerce
Political-Legal PressuresOverall political stability with uncertainty in Thailand and Indonesia
Technological DevelopmentsInternet penetrationMobile penetration
Global Trade IssuesFluctuating exchange rate
Environmental Analysis
![Page 58: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/58.jpg)
Low High
Low
Hig
h
Glo
bal
Inte
gra
tio
n
Local Responsiveness
Technology
Operations
Sales
Marketing
Transnational Matrix
![Page 59: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/59.jpg)
Core Region Travel Analysis
Country 2008 Forecasted Arrivals (mm)
2012 Forecasted Arrivals (mm)
Projected Increase from 2008-2012
Source Markets
Malaysia 24.01 38.77 61.33% 71.9%Philippines 3.55 5.00 40.80% 16.0%Singapore 11.00 13.90 26.30% 67.7%Indonesia 6.35 9.28 46.14% 45.0%Thailand 15.59 20.65 32.43% 25.4%
Hong Kong 30.98 36.95 19.23% 61.5%China 141.86 179.09 26.20% 58.4%Total 233.34 303.64 30.12%
![Page 60: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/60.jpg)
• Asia Pacific region has the highest level of growth
• Asia Pacific will trail only Western Europe but the Asian market is less competitive
Global Departure Analysis
![Page 61: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/61.jpg)
Source: Thought leaders in Marketing Roundtable 2008 Report
Current Online Travel Booking Trends
![Page 62: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/62.jpg)
Customer Segment Analysis
Leisure Travel Needs Unmanaged Business Travel Needs
Needs AST can address with current resources
• Online solutions to travel needs
• “One-stop shop” for flight and hotel needs
• “One-stop shop” for multiple services from visas to insurance
• Need for more personalized travel advice and services
Needs AST can address with future resources
• Personalized user experience- ability to interact online
• Access any time anywhere
• Efficiencies in travel planning and travel management
• Support with additional resources for group / meeting / event related travel
![Page 63: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/63.jpg)
Asia Pacific Region’s mean age is increasing but at relatively slow rate. The 20-54 age cohorts are stable segments that should be targeted
Key Population Trends
![Page 64: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/64.jpg)
Singapore Travel Destinations - use Asiatravel.com to find the best airline and hotel deals in Singapore. Use the customer buyer tools to research all aspects of the Singapore travel market. Whether looking for travel to or from Singapore, Asiatravel.com can help.
Top Cities:Singapore | Macau | Hong Kong | Kuala Lumpur | Dubai
Top Countries:Malaysia | Singapore | China | UAE | Phillippines | India
SEO Paragraph:
Sitemap:Site MapFlights CruisesRound trip flight Cruise DealsOne-way flight Singapore CruisesMulti-city flightSearch flexible dates Customer SupportFare alerts Frequently Asked QuestionsFlight deals Contact UsSingapore flightsHong Kong flights About usDubai flights Contact usMalaysia flights Media
SME travelTop Hotel Destinations Parner with Asiatravel.comSingapore hotels Become an affiliateHong Kong hotels Advertise with Asiatravel.comDubai hotelsVacation Rentals
SEO Examples
![Page 65: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/65.jpg)
Implementation Outsourcing Considerations
In-house Outsource
Pros
• Secure intellectual property rights
• Creating a technology focused culture
• Focus on core competencies
• Lower cost
Cons
• Cost to hire and train staff
• Time to market
• Need to manage outsourcing firm closely
![Page 66: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/66.jpg)
Recommendation: Hybrid Strategy
Create small in-house team that manages outsourcing activities
Use current IT resources for development of more critical, time-sensitive products
Outsourcing firm should create a content management system for AST to make changes/maintenance easier
In-house Development Outsource DevelopmentTargeted recommendations Clean web interfaceDynamic packaging Unmanaged business travel contentLoyalty programs Savings calculatorLocalization Search engine optimizationContextual advertising Mobile informationAffiliate marketing Social networking/ community
Mobile booking & payment
![Page 67: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/67.jpg)
Cost Cutting Measures
Enhance Asiatravel.com’s Bottom Line
Technology• Evaluate in terms of cost
savings• Partner with Amadeus
to incorporate eTravel Management
• Outsource tech. enhancements
Operations• Evaluate resource usage • Consolidate corporate
functions• Focus on expansion in
existing core geographies
Finance• Take on debt financing
for financial benefits• Use derivative financial
instruments to protect against foreign currency volatility
![Page 68: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/68.jpg)
Financial AppendixOverview
Financial Statement HighlightsCash Balance Grows Significantly Profit GrowthKey RatiosSources of FinancingRevenue and Profit by BusinessEmployee Salaries
Online LeisureRevenue GrowthInvestments and CostsResultsNo New Investment Forecast
Business TravelOpportunityResults
MobileOpportunityAdoption RateResultsMobile GrowthLong term growth forecasts
ValuationDiscount RateFree Cash FlowsSensitivityComparablesUncertaintiesMargin AnalysisDrivers of ValueTop UncertaintiesDelaying Investments 1 Year
Base CaseAssumptionsIncome StatementBalance Sheet AssumptionsBalance SheetStatement of Cash Flows
![Page 69: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/69.jpg)
Financial Statement Highlights
![Page 70: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/70.jpg)
Cash Balance Grows Significantly
‘09 ‘10 ‘11 ‘12
Importance of maintaining strong cash
reserves 1. Signal company strength in a tumultuous period
2. Maintain dividend to shareholders
3. Preserve resources to pursue growth
4. Protection against exogenous shocks
![Page 71: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/71.jpg)
Profit Growth
1. Slow profit growth for first two years attributed to world economic outlook
2. Rapid growth in 2011-2012 as investments start to pay off and economy rebounds
3. Short-term profit decrease is essential to gain long-term competitive advantage
‘09 ‘10 ‘11 ‘12
![Page 72: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/72.jpg)
Key Ratios
Observations:1. Decreasing profitability ratios expected over next two years2. AST’s increasing financing via debt increases leverage but hardly enough to affect credit rating3. Operational efficiency remains steady if not improving
![Page 73: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/73.jpg)
Cash Flow from Operations• Cash Flow from Operations exceeds investments in all forecasts
Debt Issue• Very low leverage (0.08 D/E) only increases to 0.27 in forecasts. Should not greatly affect cost of debt. Issuing debt is recommended
Equity Offerings• Stock is undervalued• Equity offerings not recommended in short run• Viable source of financing in long run
Sources of Financing
![Page 74: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/74.jpg)
Revenue and Profit by Line of Business
Implication:AST’s core business, online leisure, will
continue to be the most profitable and should receive the primary
focus
![Page 75: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/75.jpg)
Employee Salaries
![Page 76: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/76.jpg)
Revenue growth in 2007 and 2008 equaled 23.3% and 21.6% respectively
With global downturn, cut growth by 25%-50% in 2009 and 10-25% in
2010 before returning to above-historical levels
Online Leisure: Revenue Growth
![Page 77: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/77.jpg)
Online Leisure: Investments and Costs
![Page 78: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/78.jpg)
Online Leisure: Results(Amounts in S$’000) 2009 2010 2011 2012
Revenues 97,063 114,146 142,683 178,354
Gross Profit 24,314 26,368 30,106 34,066
Amortized Investment Cost 888 1,551 1,653 1,241
Allocated expenses 15,711 17,128 20,172 21,152
Total Attributed After-Tax Profits
6,635 6,612 7,121 10,038
Profits above “No New Investment” Forecast
(227) (74) 682 3,733
Total Investment 1,554 1788.5 388.5 388.5
ROI (15%) (4%) 176% 961%
Based off a “no new investment” forecast where AST does not pursue any new investments beyond the scope of normal
business
![Page 79: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/79.jpg)
Online Leisure: “No New Investment” Forecast (Amounts in S$’000) 2009 2010 2011 2012
Revenues 95,932 109,439 131,326 157,592
Gross Profit 23,983 25,171 27,579 29,942
Allocated Expenses 16,004 17,396 20,092 22,611
Total After-Tax Profit 6,862 6,687 6,439 6,305
Key Assumptions Revenue growth 90% of model value in 2009, 80% of model
values thereafter (competitors reduce growth)
Declining gross margins (identical to model)
Salaries, etc. grow at 5% annually (identical to model)
Depreciation, Amortization, and Financing fixed at 2008 levels
Other operating expenses between 7.5% and 8% of revenue
![Page 80: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/80.jpg)
Business Travel Analysis: Opportunity
![Page 81: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/81.jpg)
Business Travel Analysis: Results
A lucrative line of business producing significant ROI
(Amounts in S$’000) 2009 2010 2011 2012
Revenues 267 11,692 20,578 33,954
Gross Profit 67 2,689 4,321 6,451
Amortized Investment Cost
165 305 376 281
Allocated expenses
43 1,754 2,909 4,027
Total After-Tax Incremental Profits
(121) 541 891 1,843
Total Investment 494 421 211 211
ROI (25%) 128% 422% 872%
![Page 82: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/82.jpg)
Mobile Distribution: Opportunity
![Page 83: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/83.jpg)
Bass Diffusion Model used to estimate customer adoption of new mobile booking technology
Input parameters based on historical averages
Only 1 year, 2012, modeled (introduction of booking)
>400,000 customers in 2012, ~3.5% of total available market
Mobile Distribution: Adoption Rate
![Page 84: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/84.jpg)
Mobile Distribution: Results
While not a driver a company value from 2009-2012, the mobile distribution channel represents a
source of significant future growth for AST
(Amounts in S$’000) 2010 2011 2012
Gross Profit 46 86 1,697
All Additional expenses 30 58 1,059
Total After-Tax Incremental Profits
14 24 549
Total Investment 262.5 752.5 402.5
ROI 5.2% 3.2% 136.3%
![Page 85: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/85.jpg)
Mobile Drives Long Term Growth
![Page 86: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/86.jpg)
Long-Term Growth Forecasts: 2012-2016
![Page 87: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/87.jpg)
Valuation: Discount Rate
Parameter Value Method
Risk-free rate (rf) + 1.32% Yield on 5-year government bond 3/16/09 (matches investment horizon)
Company beta (β) x 0.996 Regressed last 5 years of AST monthly returns vs. Straits Time Index (STI) returns
Market risk premium (rm-rf) =
4.00% Subtracting monthly 5-year government bond from market return yielded negative premium so outside source consulted*
Return on equity (re) 5.31%
Applied Return on equity (re)
10.31% Return on equity doubled because (1) it seems rather low (risk-free rate near historical lows) and (2) new investments bear risk – a higher discount rate accounts for such risk
Objective: Compute a reasonable return on equity, re, at which to discount AST’s free cash flows
* http://8percentpa.blogspot.com/2007/06/price-earnings-ratio-and-earnings-yield.html
![Page 88: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/88.jpg)
Valuation: Free Cash Flows
Observations1.Earnings are primary source of free cash flow Increases in net working capital are primary use2.Most of value in terminal cash flows. Projecting longer term increases accuracy3.Terminal growth rate estimated as 5% (inflation + growth potential of mobile segment in particular)
Base Case
![Page 89: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/89.jpg)
Valuation: Sensitivity
Market value is highly sensitive to both the growth and discount rates
![Page 90: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/90.jpg)
Valuation: Comparables
Objective: To avoid the discount rate problem, determine value using EV/EBITDA ratios of comparable firms
Challenge:1.Almost all Singapore comparables are private (ISINet)2.Using 2009 (or 2008) EBITDA for AST does not reflect the changing nature of the business
Conclusion: Apply a DCF valuation, despite its limitations
![Page 91: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/91.jpg)
Gross Margins drive value
Valuation: Uncertainties
![Page 92: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/92.jpg)
Assuming Constant 25% Gross Margins Doubles Profits in 2012
![Page 93: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/93.jpg)
Which Uncertainties Drive Value?
Gross margins have largest effect on firm value. Business market penetration rate has second biggest effect
Dedicating resources to capturing unmanaged business market increases firm value
![Page 94: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/94.jpg)
The Top 20 Uncertainties
![Page 95: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/95.jpg)
Delaying Investments 1 Year
$-
$2
$4
$6
$8
$10
$12
'06 '07 '08 '09 '10 '11 '12
Net
Pro
fit (S
$MM
)
Immediatly increase profitability but significant long-term lag
No Delay Delay
![Page 96: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/96.jpg)
- -- -
Base Case: Key Income Assumptions
1. Gross margins decrease 2% each year, from 25% in 2009 to 19% in 2012
2. Affiliate marketing and contextual ad revenue equal 0.1% of online leisure revenue from 2010-2012
3. Salary and benefit expenses grow 5% annually
4. Other operating expenses (including marketing) as a % of revenue equal 7.5%, 8.0%, 8.5%, and 7.5% in 2009, 2010, 2011, and 2012 respectively
5. Finance costs (i.e. interest expenses) set at 10% of total debt balance
6. Depreciation equals 20% of fixed asset balance
7. Tax rate equals 14% (based on prior years)
![Page 97: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/97.jpg)
- -- -
Base Case: Income Statement
![Page 98: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/98.jpg)
Base Case: Key Balance Sheet Assumptions
Item Assumption (All amounts stated in $S‘000)
Cash 12% of revenues
Receivables 7% of revenues
Inventory 6% of cost of sales
Prepayments 7% of revenues
Tangible Fixed Assets Grow 500 each year
Intangible Assets Grow 2,500 in 2009, 1,000 in 2010, and 500 annually beyond in 2011 and 2012
Trade and Other Payables
Benchmarked to cost of sales at past 3-year average
Deferred Income and Taxation
Benchmarked to revenues at past 3-year average
Long-term Borrowings Grow 2,000 in 2009, 2,000 in 2010, and stay constant in 2011 and 2012
Shareholders Fund Plug value
![Page 99: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/99.jpg)
- -- -
Base Case: Balance Sheet
![Page 100: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/100.jpg)
- -- -
Base Case: Statement of Cash Flows
![Page 101: Cerebration Duke Bd Ventures Final](https://reader038.fdocuments.us/reader038/viewer/2022110307/556c0b67d8b42a852a8b47c8/html5/thumbnails/101.jpg)
Asiatravel.com Annual Report 2007, 2008.
Euromonitor: Travel and Tourism Industry Report, April 2008.
Euromonitor International: Future Demographic - Asia Pacific, January 2006.
Euromonitor International Consumer Lifestyles reports for Singapore, Philippines, and Indonesia;
Euromonitor International: Tourism Flows Inbound - Philippines, 11/25/08.
Thought Leaders in Marketing Roundtable Report, HSMAI Asia Pacific 2008.
Turner, Lindsay W. and Stephen F. Witt (2008), Asia Pacific Tourism Forecasts: 2008-2010, Thailand: PATA.
Business Monitor International Q4 Tourism Reports (Malaysia, China, Singapore, Indonesia, United Arab Emirates, Hong Kong, Thailand).
News@PATA weekly newsletter, 5 November 2008. URL: http://www.pata.org/patasite/index.php?id=1883
Travelsmart-asia watch, Abacus International, 18 November 2008. URL: http://www.abacus.com.sg/trvlsmartasia/trvlsmartwatch/ViewItem.aspx?ID=139
How to build backlinks. URL: http://www.webconfs.com/how-to-build-backlinks-article-16.php.
Knight, Kristina. “Compete: Targeted ads great for travel sites”. July 29, 2008. URL: http://www.bizreport.com/2008/07/compete_targeted_ads_great_for_travel_sites.html
Grossman, David. “Travel 2.0: Social networking takes a useful term”. 1/26/07. URL: http://www.usatoday.com/travel/columnist/grossman/2007-01-26-grossman_x.htm.
Hutchison Telecom Q3 2008 Key Performance Indicators: URL: http://www.htil.com/eng/ir/presentation/pre081112.pdf
SingTel Group news release, 12 November 2008. URL: http://home.singtel.com/news_centre/news_releases/2008_11_12.asp
Industry Research: Telecommunication Industry Issue. ISI Analytics: Thailand. 1Q 2009.
Asian Forecasts. Buddecomm Report. August 2008.
Mobile Phones in Asia-Pacific. Datamonitor. February 10 2009.
Sources Consulted