Below are my views, which could be wrong and speculative in nature.
This company is quite conservative and is struggling to break away from the manufacturing mindset to consumer product mindset. They are still dependent on B2G contracts for which the growth rate will not be that big.
It seems that their strategy is to keep the company going at current pace without taking big risks until they find a suitable buyer to buy them out. Few things that support this argument:
- They are not enthusiastic in bringing a fresh group of folks in top management or at least have a plan towards it. Been looking for 3 years and in last 1 year they stopped looking
- Their capacity utilization is always at 95% or higher for last 2 years. Expansion is not much in the play.
- Revenue growth is in order of 10-15% CAGR, which is too low for an early stage company. No serious initiatives to unlock the potential.
- Significant cash reserves that remain undeployed for long
- Been talking to “few people” about acquisition of Cupid for last few quarters. Given that mgmt was conservative, I would expect them to close the deal if there is fair value. But, since they didn’t close any deal for so long, it appears that investors are not valuing the potential that much.
I have been following this company for 2 years and I should say that my patience has finally run out. It is increasingly appearing that this is a value trap compared to other opportunities available in the market.
Overall, Cupid seems to be a startup which is moving like a very large corporate.
Note: There is no serious red flag in the company and there is very low risk of capital loss. The mgmt is shareholder friendly and I trust their integrity. But, just that I am doubtful on their capability to unlock value, compared to other opportunities in the market.
Disc: Invested. Might exit soon.
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