If you look very closely at a caterpillar, you might notice there is nothing about it that tells you what it can become. And while the transformation from a cute and cuddly crawler to a beautiful butterfly sounds like a fairy tale come true, the process is anything but.
The caterpillar’s metamorphosis process begins when it builds its chrysalis and sheds its caterpillar skin. It then goes on an inward journey and literally digest its physical body – brain, organs and all, to become a temporary blob of goo. The being then proceeds to evolve and unlearn everything it ever was and learn everything that it is to become. Throughout the process, the being remembers experiences from its formative days, where it came from.
The blob of goo then grows its new organs, eyes, wings, and other body parts. Growing from its innate wisdom, the new being pushes through its protective cocoon barrier, carefully squeezes itself out, and emerges as a being that is completely different in its physical structure and way of life, finally ready to fly.
To voluntarily dissolve oneself in order to evolve is highly courageous – Everyone wants to go to heaven, but no one wants to die to get there.
And courage is one of the highest orders of character that we look for in management when we conduct our investment research, not for the sake that they will appear sexy, or that “investors will appraise higher valuations if we show them what they like to see”; not because they have to, but because they want to. And to do so with financial prudence such that the business remains profitable and thus accountable to stakeholders – ever rare.
Company Free reported its 1H19 results with 9% increase in revenue, 33% increase in operating income, 35% increase in net profit after tax and 80% in dividend pay-out as the company’s global expansion plan to disseminate their unique & one-of-their-kind products continues. This metamorphosis process took 2 decades, and we witnessed how it finally broke through its cocoon over the past 3 years to grow into a powerful market leader in the mid-long-term. That it took so long to finally breakthrough to the global stage indicates the extremely strong barrier the company and management team had to “push through” to lead their industry into this new adventure, and the fact that they succeeded speaks volume of their inherited will, as well as how powerful this new generational wave is once unleashed.
Global industry forces played a critical role in their path – a couple months ago, international companies that were once from competing grounds came together for the first time in the industry’s history to create a new range that was unthinkable given the ongoing trade tariffs tensions. The consultant to lead the tripartite project is none other than Company Free, and this shows how they have succeeded in creating one of the largest and most successful stages in their industry.
Interestingly, the sharing economy, with the introduction of the Ubers and the Airbnbs of the world, is helping to uplift Company Free into larger complimentary stages as well, so we are benefiting from the disruptions led by these companies, without having to go through these companies’ painful cash-burning customer-acquisition phase.
Meanwhile, their valuations stand at a 50-100% discount to their international peers and is a logical and reasonable target for profit-hungry cash-burning companies desperate to show profit growth to their anxious investors. Obviously, we hope they will not be bought out and instead continue to grow organically to reach their full potential.
~This post is a tribute to the courageous ones, and an inspiration to us that we can only grow forward. 🙂 _/|\_