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Takung Art Company: Profitable Growing Monopoly Trading Under The Radar


Takung Art Company has an interesting high margin business model.

It has positive cash flow, a strong balance sheet, and no direct competitors.

It has a low valuation and is growing at a strong pace.

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I don't often write about companies with market caps as small as $55 million, but when I do, it is because I see a lot of growth potential and a compelling business model. Many investors and traders can get lured into buying the stocks of young companies that are many years away from profitability. This can be the case with biotech companies that don't yet have an FDA approved drug on the market. Every biotech might have an interesting story and a serious disease to address. However, some companies may take decades to become profitable and the stock prices can fizzle out quickly when the company faces roadblocks along the way. With that in mind, there is a young small company that has plenty of growth potential and is already highly profitable. It is not a biotech, but an art-related trading company.

Takung Art Company (OTCQB:TKAT) is a China-based company that has created a business model that allows art collectors and investors to buy and sell ownership units of paintings, calligraphies, jewelry, and precious stones. The company is essentially allowing customers to buy art like stocks. Instead of buying shares in a company, Takung's customers buy pieces of art, which it calls units on its online trading system. The artwork being traded on Takung's platform is considered valuable from renowned living artists. Takung uses expert opinions from third parties to appraise the artwork.

Interestingly, the company began as a biotech under the name Cardigant Medical back in 2009. It was focused on developing treatments for vascular disease. It restructured in 2014 and assigned the Cardigant Medical business to Cardigant Neurovascular. Then, a few months later, the business of Hong Kong Takung was acquired through a reverse merger. The company was later incorporated and became the Takung Art Company. As a result of the restructuring, it is no longer operating as a biotech and is now focused on the art trading business.

Takung doesn't have any direct competition. No other company provides this service in China. There are indirect competitors such as auction houses and art galleries that buy and sell similar art-related items. However, Takung has the competitive advantage of being the sole company that allows investors to purchase units of art instead of entire paintings. Therefore, Takung operates a monopoly.

Not all investors can afford or desire to purchase entire paintings or other valuable art. Takung allows investors to invest in something other...