1. Investment Snapshot
2. Thesis
3. Valuation & Price Target
4. Business & Product Moat
5. People & Governance
6. Market & Macro
7. Financial Quality
8. Risk Register
9. Prediction Market
10. 𝕏 Posts
Discussion
1. Investment Snapshot
2. Thesis
3. Valuation & Price Target
4. Business & Product Moat
5. People & Governance
6. Market & Macro
7. Financial Quality
8. Risk Register
9. Prediction Market
10. 𝕏 Posts
Discussion
1. Investment Snapshot
2. Valuation
Discussion
Symbol
OCG
Event Date
2020-12-16
IPO Date (Actual)
2020-12-15
Sector
Industrials
Subsector
Commercial Services & Supplies
Offer Range
$4.00-$4.00
Shares Offered
5.07M
$81.0M
Implied Upside vs Midpoint
Description
We are an online provider of collectibles and artwork e-commerce services, which allow collectors, artists, art dealers and owners to access a much bigger art trading market where they can engage with a wider range of collectibles or artwork investors than they could likely encounter without our platforms. We currently facilitate trading by individual and institutional customers of all kinds of collectibles, artworks and certain commodities on our leading online platforms owned by our subsidiaries in Hong Kong, namely the China International Assets and Equity of Artworks Exchange Limited and HKDAEx Limited. We commenced our operations in March 2018 and our customer trading volume has been growing rapidly since then. We also provide online and offline integrated marketing, storage and technical maintenance service to our customers in China. We, Oriental Culture Holding LTD, are a holding company incorporated under the laws of the Cayman Islands and the investors would be investing in the holding company, with operations conducted via our subsidiaries, variable interest entity and its subsidiaries. According to the report of “E-commerce in China 2019” released by Ministry of Commerce of People’s Republic of China on July 20, 2020, China’s e-commerce continued to grow in 2019. Data of National Bureau of Statistics of China indicates that in 2019, the national e-commerce transaction volume reached RMB 34.81 trillion (approximately $5.02 trillion), an increase of 6.7% year-on-year. --- According to the statistics of the Ministry of Commerce of the People’s Republic of China, in 2019, national online retail sales reached RMB 10.63 trillion (approximately $1.53 trillion) and retail e-commerce realized sales growth of 16.5% in China. On many mainstream e-commerce platforms, cultural products such as arts and crafts flourished and developed rapidly, and art e-commerce is gradually growing. Online trading has become a major trend of the global collectible and art trade. As a comprehensive service company with rich cultural and art collection market operations and marketing, we seize current development opportunities and provide online and offline supporting services for domestic and international art e-commerce platforms. We plan to build a complete art business e-commerce service chain to serve the industry. Beginning in late 2019, there were reports of the COVID-19 (coronavirus) that has surfaced in Wuhan, China, the pandemic quickly spread to many provinces, autonomous regions, and cities all over the China. To the prevention and control of the spread of the pandemic, the Chinese governments issued administrative orders to impose travel and public gathering restrictions as well as to work from home and self-quarantine. Due to the COVID-19 pandemic, most consumers in China have chosen to shop online, which has promoted online sales of the retail e-commerce industry, especially in January and February 2020 when brick and mortar stores were closed due to the office and store closure order by the government. According to the statistics of the Ministry of Commerce of the People’s Republic of China, during the first half of 2020, the national online retail sales reached RMB 5.15 trillion (approximately $735.7 billion) in China, an increase of RMB 0.33 trillion (approximately $47.1 billion) from RMB 4.82 trillion (approximately $688.6 billion) of the same period of 2019. Although COVID-19 promoted online retail industry, especially for the platforms that sell household products and groceries during the outbreak, our business of online trading of collectibles and artwork products has been negatively impacted as they are discretionary and non-essential products. We provide customers of our online platform with comprehensive services, including account opening, art investment education, market information, research, real-time customer support, and artwork warehousing services. Most services are delivered online through our proprietary client software and call center. Our client software provides not only market information and analysis, but also interactive functions including live discussion boards and instant messaging with customer service representatives, which we believe enhances our customers’ engagement. Internally, we collect and analyze customer behavior and communications data from our client software, customer relationship management system and the exchanges in accordance with laws and regulations, which allow us to better understand, attract and serve our customers. We provide industry solutions and related software products, system development and technical support services for our cooperation e-commerce platform customers. We strive to minimize conflicts of interest with our customers, which we believe is essential for our long-term success. Under the trading rules of the two exchange platforms we operate on, we do not set, quote or influence the trading prices, and cannot access our customers’ money. We have achieved substantial growth since our commencement of operations in March 2018. However, our business, financial condition, and results of operations have been adversely affected by the outbreak of COVID-19 as our net revenues and net income decreased significantly during the first half of 2020, compared to the same period in 2019. Our offices were closed for the Lunar New Year Holiday Break which remained closed to implement the work from-home policy until mid-March, 2020, as required by relevant Chinese government authorities. Since mid-March, 2020, our offices have reopened and are in full operation since then. During the closure of the offices, especially during the closure of our warehouse for collectibles and artwork products traded on our platform, the appraisals for certain collectibles and artwork were delayed from the beginning of February to mid-March, resulting in delays of the subsequent listing process of such collectibles and artwork, thus affecting our income from listing service fees and marketing service fees. Also, our warehouse was unable to take in the new collectibles from our customers for warehousing during the period when it was closed. Affected by traffic control and logistics restrictions in China during the outbreak, our customers could not normally ship and hand over their collectibles to us for verification and custody, which also delayed the listing process for such collectibles/artwork and reduced the number of items listed on our platform, resulting in substantial revenue decline. However, the domestic express delivery services have resumed, and we have also opened mailing services to provide customers with convenient method for sending and receiving collectibles and artwork products. Due to the self-quarantine requirement and travel restrictions in China, our marketing staff was unable to carry out in-person promotion activities and face-to-face communication with customers during the outbreak, which greatly affected the development and introduction of potential customers. Our unaudited net revenues for the six months ended June 30, 2020 were approximately $2.5 million, as compared to approximately $7.9 million for the same period in 2019, a decrease of approximately 69%. Our unaudited net income for the six months ended June 30, 2020 was approximately $0.4 million, as compared to approximately $6.3 million for the same period in 2019, a decrease of approximately 94%. We expect our total revenues to increase in the second half of 2020, compared to the first half of 2020 due to the re-opening of businesses in China starting around the end of the first quarter, and more and more businesses, transportation, logistic and marketing activities have gradually resumed since then. We also expect our total revenues for the second half of 2020 to increase compared to same period in 2019. However, the results of operations for the second half of 2020 and/or the full year 2020 and beyond are still uncertain and may be adversely impacted by any further outbreak or resurgence of the COVID-19 pandemic. Due to the significant uncertainties surrounding any further outbreak or resurgence of COVID-19, the extent of the business disruption and the related financial impacts on our business cannot be reasonably estimated at this time. --- Our principal executive offices are located at No. 2, Youzishan Road, Dongba Street, Gaochun District, Nanjing, Jiangsu Province, People’s Republic of China. Our telephone number at this address is (86) 25 85766891. Our registered office in the Cayman Islands is located at Sertus Chambers, Governors Square, Suite # 5-204, 23 Lime Tree Bay Avenue, P.O. Box 2547, Grand Cayman, KY1-1104, Cayman Islands. Our website is www.ocgroup.hk.
Oriental Culture Holding LTD annual income statement and balance sheet, FY 2022 to FY 2025, as reported in SEC filings.
| Metric | FY 2022 | FY 2023 | FY 2024 | FY 2025 |
|---|---|---|---|---|
| Revenue | — | $1.6M | $623K | $1.9M |
| Gross profit | — | $1.2M | $441K | $1.6M |
| Operating income | — | ($4.3M) | ($3.2M) | ($3.8M) |
| Net income | — | ($3.6M) | ($2.4M) | ($3.9M) |
| Metric | FY 2022 | FY 2023 | FY 2024 | FY 2025 |
|---|---|---|---|---|
| Total assets | — | — | $53.0M | $66.5M |
| Total liabilities | — | — | $3.1M | $1.9M |
| Total equity | $49.6M | $45.5M | $49.9M | $64.6M |
| Cash & equivalents | $29.0M | $17.7M | $17.1M | $32.3M |