China Yida Holdings (CNYD)

[redman_2014]

CNYD - Earnings projection summary.

China Yida is in the sweet spot of the growing tourism industry mentioned in your article. I think CNYD will begin to garner a lot of attention once it's numbers begin to speak for themselves. Presently they are pretty undiscovered.

Below is a summary I prepared to try and predict what CNYD is capable of. Please poke holes in it if needed because it's a work in progress and I would value the input.

Outstanding Shares(after recent dilution): 19.6 Million + 770,000 warrants with $5.00 exercise price, for a total of 20.4 Million.

Insider Ownership: 55% (after dilution and warrants).

Q3/08 - $4.90 M Net Income (62.8% profit margin)
Q4/08 - $4.66 M (50.8%)
Q1/09 - $4.97 M (50.7%)
Q2/09 - $6.95 M (53.9%)
Q3/09 - $7.14 M (51.0%)

In Q3/09:

Advertising revenue went from $5.8M to $8.5M, and tourism revenue when from $1.99M to $5.51M in 2008 and 2009 respectively.

Tourism gross margin was 89% in Q3/09, significantly higher than the advertising gross margin of 75%. As tourism revenue begins to contribute more and more to overall revenue, company profit margins should rise above the present 50% average. The margins should also improve as the advertising industry rebounds from the depressed selling environment caused by the economic downturn. I believe profit margins of 60%+ will be achieved again.

A statement from the December Investor Presentation indicates they believe they will be able to effectively raise prices every year. 'Visits to tourist attractions are predicted to increase at CAGR of 8% between 2008 and 2013, with annual average growth in value of 13%.' So they project their tourism revenue will improve by 13% every year with only an 8% increase in visitors.

Notes:

1) Great Golden Lake has seen attendance increase from 22K in 2006 to an estimated 600K in 2009, and has jumped almost 100% from 2008. I calculated average visitor revenue as anywhere between $22.75/visitor(from 2008: $7.28M generated from 320,000 visitors)to $30.50/visitor(nine months 2009: $13.74M generated from approx. 3/4 of 600,000 visitors, or 450,000).

2) Hua’an Tulou Cluster, a world cultural heritage site, opened Oct 1st, 2009. Company expects 160,000 visitors in 2010 and ticket prices are set at 60 RMB each, or $1.4M in revenue for 2010.

3)Yunding Recreational Park will open in Q2 2010 with an estimated # of visitors in 2010 of 300,000. Estimated revenue per visitor unknown but probably similar to Golden Lake, so using an estimated $25/visitor gets us $7.5M revenue for 2010. The revenue per visitor could be significantly higher aswell since Yunding will have a hotel, where I do not think Golden Lake does. “We are pleased to partner with the Yongtai County government to develop the largest leisure site in Fujian. We are confident that we can transform this site into a world-class leisure and vacation resort attracting visitors from neighboring coastal areas such as Fuzhou, Xiamen, Quanzhou and Putian, as well as from other parts of China and overseas." Dr. Chen Minhua, Chairman.

Q4/09 Estimate:
Advertising revenue - $9M
Tourism revenue - $6M
Net Income - $8M (using 53% profit margin)


FY2010 Estimate:
Advertising revenue - $42M
Tourism revenue - $35M; (Golden Lake)$26M, (Yunding)$7.5M, (Tulou)$1.5M.
Total revenue - $77M
Net Income - $42M (using 55% profit margin)


FY2011 Estimate:
Advertising revenue - $50M
Tourism revenue - $50M; (Golden Lake)$30M, (Yunding)$17M, (Tulou)$3M.
Total revenue - $100M
Net Income - $60M (using 60% profit margin)

*All the above estimates do not include train advertising revenue, except for what was included in Q3 numbers. This is an unknown so I have not projected for it.

Present market cap: $235M(using 20.4M shares)

2009 Projected earnings - $27.5M, eps of 1.35
2010 Projected earnings - $42M, eps of 2.06
2011 Projected earnings - $60M, eps of 2.94

2009 PE - 8.52
2010 PE - 5.61
2011 PE - 3.91

And a Nasdaq company with huge margins and growth potential like CNYD will deserve a premium valuation of 15-20, so CNYD could become a $30 stock in 2010.


Thanks in advance for the input.


-Adam