Some catching up to do for Catcha Digital to surpass previous 60 sen high

Catcha Digital Bhd has been moving upwards above its resistance levels in recent weeks. The counter is likely to continue its bullish trend after crossing the 41 sen resistance level, sparking a positive momentum.

The stock fell to a year low of 27 sen March this year, but rose to 47 sen in July. There is still a lot of catching up to do before it surpass its year high of 60 sen seen last September.

The digital media company has been catching lots of attention for its rapid growth through various acquisitions late last year. Positive sentiments also stemmed from its recently completed regularisation plan to exit GN2 status.

Last year in November, Catcha inked a letter of intent to buy a 51% stake in digital agency DS Services Sdn Bhd, or better known as Digital Symphony, for RM21.17 million. Catcha said the consideration payment will be split into two tranches over two years, payable upon Digital Symphony achieving a profit guarantee of audited profit after tax of RM4 million for the first year post-acquisition, and RM4.3 million for the second year.

Digital Symphony is a Malaysia-based data-driven digital agency that operates in Malaysia and Singapore. It provides differentiated performance marketing solutions to clients using its proprietary software and analytics tool.

Founded in 2014 by Kuhan Kumar Palaniappan, the company serves a broad range of enterprise clients with a focus on the property development sector. A month earlier (in October), Catcha announced the acquisition of two digital media companies in a bid to build itself as a leading digital group in Southeast Asia.

Catcha said it is investing RM3.43 million to buy the remaining 49% stake in Ittify Sdn Bhd, an influencer platform in Malaysia which serves more than 100 brands with 7,000 influencers on its platform. The group already owns the other 51% stake in Ittify.

The second acquisition involves Catcha buying a 30% stake in Headline Media Sdn Bhd for RM1.24 million, with an option to acquire another 50% stake within 36 months.

Headline Media owns and operates WeirdKaya, an English language website in Malaysia, as well as emerging Malay and Chinese language sites, WeirdKaya BM, LokLokWords and EzLokal.

Naturally, it is faster for Catcha to buy existing businesses to help its business grow. However, it may take a while before these businesses turn profitable (if they are not yet making money). But given the heightened interest in the counter, perhaps investors can catch the drift.