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During my trip to Hong Kong a few months ago, I had the privilege of meeting “CK Lau”, the Chairman and founder of Lion Rock Group (1127 HK － US$146 million).
Lion Rock Group is one of the largest book printers in the world. CK Lau built up the business from scratch by setting up printing operations in China back in 2005. Since then, he’s made a series of acquisitions, all at mid-single-digit P/E multiples or lower.
CK Lau is a brilliant individual. At his previous company, Cinderella Media, he generated annual returns for shareholders of 23% per year over 13 years.
Today, he focuses on building Lion Rock into a printing industry behemoth. The company has three separate businesses working together to satisfy the demands of book-readers or publishers:
- Printing operations in China, Malaysia and Australia through subsidiaries 1010 Printing, Opus Group and Papercraft
- Print services, helping publishers with one-stop solutions for delivering physical books through subsidiaries Asia Pacific Offset and Regent Publishing Services
- Publishing, through UK publisher Quarto
Book printing is a slow-growing industry at best. E-books and audiobooks will probably continue to take market share, though at a very slow pace.
On the other hand, the industry's decline enables proactive individuals like CK Lau to buy businesses on the cheap. He’s also proven himself nimble enough to cut costs and keep them profitable despite the industry headwinds. It also helps that Lion Rock focuses on coffee table books, cookbooks, and children’s books, as they’re less likely to be replaced by e-books.
The printing operations experienced headwinds during COVID-19 as its Malaysian plant had to close down and freight costs shot up to record levels. At the same time, during COVID-19, many rediscovered a love for reading. Today, Lion Rock has experienced a full recovery from the pandemic.
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