Remark Media
Aggressive Buy
Target Value: $12.50

A deeper dive into Remark's rapidly evolving Kan Kan subsidiary indicates a very real concept to market transformation taking place where the market is significantly broader and more receptive than the most bullish scenarios discussed even six months ago. Remark may soon be viewed as two distinct companies but investors' myopic focus remains firmly locked on operating business segments that may be viewed as legacy operations over the next 12 -18 months. Management commentary on performance to date indicates that Kan Kan is tracking for $5-6m in revenue for 2017. The revenue from operating contracts discussed for Q4 suggests that the revenue run rate could move exponentially higher in 2018 where organic growth alone could push Kan Kan's top line up to $20-25m in revenue. We see tremendous upside to those numbers as Kan Kan is uniquely positioned to be an early leader in the gold rush underway to acquire AI technology, applications and contracts in the fastest growing market in the world. Remark is the only sub billion market cap company in the space to acquire a company based on the other side of the Great Wall (Shanghai based Fanstang acquired in '16) and they have also established a robust physical presence there with 63 employees based in offices in both Chengdu and Hangzhou. More importantly, Remark's Kan Kan was an early leader in the space tying up data partnerships with behemoths Alibaba Group and Tencent, which gives them tremendous street cred with potential acquirees to go with the prestige of its Nasdaq listed acquisition currency. We see Remark as uniquely positioned to be an early winner among acquirors of smaller ($5-$15m revenue) AI players in China and believe they are already pursuing deals that could double our CY '18 revenue projections through acquisitions.

Key takeaway here - Remark's Kan Kan is a shooting star that could soon eclipse the value of the rest of the company combined and by Q4 of 2018 will likely be Remark's biggest source of revenue.  If analyst multiples for comparable rapidly growing AI companies are applied (10x CY 2018 revenue used by Roth analyst Brian Alger with last week's VERI Upgrade) this would value Kan Kan operations at approximately $8 per Remark share.
(CY 2018 Revenue $20m x 10 = $200m or approximately $8.60 per Remark Share).
While we do not take issue with an aggressive valuation given the growth trajectory of the companies in this space, we believe a more conservative approach is warranted generally and we see the current value of the Kan Kan operations at approximately $6 per Remark share, underscoring what see as a fundamental mispricing of Remark shares.

{Adj. Valuation Metrics - 6x CY '18 revenue of $20m = $120m or +/- $6 per Remark Share}

Remark Division
Value Per Remark Share
Kan Kan
Domains - Other


This information is for internal use only and has been prepared by PCSC. This document is for information and illustrative purposes only and does not purport to show actual results. It is not, and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action. Opinions expressed herein are current opinions as of the date appearing in this material only and are subject to change without notice. Reasonable people may disagree about the opinions expressed herein. In the event any of the assumptions used herein do not prove to be true, results are likely to vary substantially. All investments entail risks. There is no guarantee that investment strategies will achieve the desired results under all market conditions and each investor should evaluate its ability to invest for a long term especially during periods of a market downturn. No representation is being made that any account, product, or strategy will or is likely to achieve profits, losses, or results similar to those discussed, if any. No part of this document may be reproduced in any manner, in whole or in part, without the prior written permission of PCSC. This information is provided with the understanding that with respect to the material provided herein, that you will make your own independent decision with respect to any course of action in connection herewith and as to whether such course of action is appropriate or proper based on your own judgment, and that you are capable of understanding and assessing the merits of a course of action. PCSC does not purport to and does not, in any fashion, provide broker/dealer, consulting or any related services. You may not rely on the statements contained herein. PCSC shall not have any liability for any damages of any kind whatsoever relating to this material. You should consult your advisors with respect to these areas. By accessing this material, you acknowledge, understand and accept the foregoing.


Point Clear Strategic Capital
Point Clear, AL 36564