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I don't disagree with you or Headley, just a different perspective on timing and strategy.
Let's look at how the company has operated this past year, the first year they have been public. Their business has been exploding. As the cash grew, they initially took a conservative stance as they weren't sure the economy was going to hold up beyond the massive China stimulus and huge post-2008 bounce. At the same time they have been publicly talking about ways to grow the company without compromising margins. They uplisted from Amex to the Nasdaq Global Select exchange. All of this seems prudent and reasonable to me.
In the last quarter, they seem to have shifted their tone and are talking now about implementing growth strategy. They have also done A LOT with regards to the share price, including a tons of conferences, private meetings with analysts and investors, a very thorough open house with advertisers and other partners on the premises, plus they set up the buyback plan and have publicly responded to investors re a dividend. The stock went from $7 to $22 in a few weeks after they took all of these steps. It has now retraced 50% of that move, IMO it has as much to do with RINO, CEU, and stockgod as anything else, but a 50% retrace isn't unusual for a parabolic move and does not indicate that the stock is not going to continue upwards.
According to the last CC, they are incorporating dividend into the 2011 budget and growth planning process. Makes sense to me and that's what a confident company would do. How can they implement a meaningful recurring dividend without incorporating that outlay into their budget and capital expenditure planning, especially as they are a high-growth company with major plans going forward?
It's a volatile stock, but I don't see any reason to panic, on the contrary I am looking forward to significant growth in 2011 in the core business, significant expansion of airport routes, a 15% rate increase, new business initiatives that have been thoroughly vetted and planned, and a dividend that will not compromise growth strategy. The stock action is insane, though, wish it was a smoother ride.
'coming days soon' was one of the difficult-to-understand phrases, not sure that's the exact words he used but would expect the planning announcement to come in Dec. or Jan. He also stated they were trying hard to land 2-3 more airports by end of year, depending on the size that could add substantially to 2011 earnings. Especially if the rate of airport expansion continues... Coupled with the 15% rate increases, they should have plenty of cash 'bandwidth' to handle new projects, network expansion, AND a dividend.
Here's a rough transcription of the pertinent CC comments re announcing a detailed plan for 2011 (including dividend):
Ping Luo: "Obviously you have a lot of cash on the balance sheet, at the end of this quarter you have $170 million cash, um, what's your planned use of cash, what's your plan in terms of share buyback and dividend?"
Jacki Lam: "Actually, we are formulating a very detailed plan, I think altogether with the next year's budget, next year's growth strategy, and how we use our cash in the coming future. So, like for example, with those kind of new projects we definitely will spend some kind of money on those new projects. In terms of the capital market, I think that the buyback that we launched by the end of September, actually we will look at the market situation right now and see if we need to buy any shares in the market if it went crazy at some [...] in time. Another thing that you asked, for example like the dividend, we are also - we will put that kind of plan into our next year's, both the budget and our expected cash flow in the coming future. And we, I think we will make another announcement for that detailed planning for the next year in the coming days soon."
(probably got some of Jacki's words wrong, but this is close to verbatim)
Never mind, got in and will see if they mention a December PR.
I thought it was mentioned in the conference call, that there would be a release from the company re the 2011 growth plan, and I thought that comment was also in context of the dividend --- but I haven't been able to re-listen to the CC, keep getting an error message from the site.
Here's the link, is anyone else able to get an audio stream?
http://www.investorcalendar.com/IC/CEPage.asp?ID=162179
CEU - the company must publish a class schedule, did the shorts research/disclose this, and did they make their film when classes were supposed to be in session?
Believe me, I share your frustration. I just think the buyback was handled correctly given the 'natural' appreciation that occurred.
The way I look at it, there are two tiers of U.S.-listed Chinese stocks -- those that are taken seriously (BIDU, FMCN, etc.) and get valuations of 20-40x (and beyond). And then the rest of the pack, which are viewed as garbage. My investment thesis here is that CCME will make the transition at some point to the higher tier. Wish it happened yesterday, but I think that if the management continues to act conservatively, while making huge profits audited by Deloitte, this will happen in time.
From this perspective, buying back shares looks a little desperate to me, I don't think it makes management look confident if they are directly manipulating the share price. And it didn't turn out to be necessary anyway. However, a dividend is another story. If they come out with a business plan that spends money on smart, accretive expansion, PLUS gives shareholders a nice dividend, they will come out looking great and may inch up a bit toward that higher tier of Chinese stocks.
That's how I hope it plays out, anyway, I'll be patient and see what they say - so far I like what they have done.
That may be true for you, and possibly true for many investors, but it doesn't make any sense to me. The stock repurchase was always on contingency, and it was intended to support the pps, not due to an oversized float, etc. On the contrary, the float is relatively small.
So when the pps went from $7-22 shortly after the program was set up, the last thing I would want the management to do is chase the bid UP. The stock nearly tripled, why would they buy shares?
I understand that there is a 'guilty until proven innocent' dynamic at play here, so perhaps the management should be more sensitive to anything that can be perceived as a credibility issue. But should they have bought back shares as the stock tripled, just to avoid this condemnation? I'm not sure I would view that as a good move, personally.
People forget that the management team is running the company day-to-day, not staring at the stock price. They are utterly confident in their business - they are counting the real cash flow, expanding the real business, etc. - so maybe they don't care so much about short term perceptions but are making day-to-day decisions that are in the best interests of the business. That would favor long term shareholders, I believe they have stated that is their interest.
Good question re the Starr warrants - wonder if they added another $10 mil to the treasury.
Well, he has 4200 followers who read his twitter stream and he runs a prominent trader website. Combined with the CEU and RINO debacles, there's no doubt his tweet has an outsized effect on short term support for the stock price, IMO.
That said this drop can be a healthy thing for the stock, heck even an attack article would be healthy at this point because it would take the damn issue off the table, and would be weak stuff. Might even force the company to step up a little more, not that I have any real complaints re management or the fundamental performance of CCME.
CCME - I remember people complaining that the company didn't have a broadcast or wireless distribution model, and how laughable it was that CCME merely produced a digital imprint of content/ads and distributed it manually to hard drives on buses.
Since then CCME has reported yet another round of spectacular earnings and their margins are up to, what, 75% now? Just ask VISN how the broadcast model is working for them...
It's a typical management error to throw the profits away at this point in the growth curve on low-margin acquisitions or unprofitable upgrades for their own sake. This management seems to have a pretty good sense of how to keep their advertisers, bus operators and customers all happy, while making busloads of money, quarter after quarter.
Not sure if you are suggesting - again - that there may be something negative to be discovered by riding the buses around China. Perhaps you are foreshadowing the hit piece you are tweeting about - someone will ride around on buses and look for inoperable screens, or bus routes that haven't been outfitted with screens yet, interviews with bus drivers that have never heard of CCME, etc. Wouldn't be hard to do, it would mean absolutely nothing given that the network is in a constant state of expansion... but might give a few people an opportunity to get out of their short position, and maybe a few others that would like to get in cheap.
The reason it doesn't matter is that the company has $170 million in the bank (probably closer to $200 million by now). Unless someone can come up with proof that Deloitte is colluding in fraud, or is incompetent, I don't really care if the bus driver has ever heard of CCME.
Not sure why you are raising these issues, stockgod, but you are sort of spreading the rumors while maintaining plausible deniability - tweeting to 4k followers that you wouldn't be surprised if the stock came under attack, posting that you'd love to ride the buses 'just to see what's up with their business', all the while stating how much you love the company... very nice job there. So what's your entry price?
CCME/stockgod - so what's up with your tweet to 4200 followers:
"i'm like 99% convinced that some "muddy waters" style co is currently taking bus routes throughout china to test $ccme ... "
Heard a rumor? Starting one? Or do you have evidence that would make you '99% convinced'...?
I think there are plenty of buyers watching to see where CCME settles before it heads higher, many of whom sold at ~$20 or are short and will have to cover before the next leg up. The chart sure looks like it is ready to move, don't see it going much lower myself.
I think it would be great for the stock for CCME to come out with a solid, thoughtful business plan for 2011, along with conservative guidance and a small dividend. CCME's management style is looking pretty good these days, IMO - great numbers + conservative management is the way to distinguish themselves from the crowd.
Lol, I was wondering the same thing. Incredibly quiet, even the bashers have abandoned the Yahoo board. Although we did get a nice tweet from stockgod, apparently looking to start a rumor on a CCME hit piece - anything to get in cheaper, I suppose.
Knowing what we know about this company, this is just a great setup for a powerful move IMO. Don't know if it's going to be a month from now or this afternoon, but the stock is forming a base above prior resistance and drifting higher on low volume - a well-stuffed, slow-cooking turkey in the oven. ;) Happy Thanksgiving all.
http://stockcharts.com/h-sc/ui?s=CCME&p=D&yr=0&mn=3&dy=0&id=p80795273387
Found this research report on airport growth and expansion in China, IMO this is a huge opportunity for CCME given the crazy margins they get for this sector.
http://www.google.com/url?sa=t&source=web&cd=1&ved=0CBMQFjAA&url=http%3A%2F%2Fwww.ukti.gov.uk%2Fdownload%2F116196_103301%2FAirport%2520Sector%2520in%2520China.html&rct=j&q=%22airport%20sector%20in%20china%22&ei=NxrsTNfXBoPSsAOI3LidDw&usg=AFQjCNG-9V5HqWnaiaAmc5IlirFHmDo8Rg
$300 million share repurchase program? Wow.
Any day the FBI raids corrupt hedge funds is a good day, in my book... heck, with any luck these might be the heavy shorters/Yahoo bashers of CCME. ;)
The company has to state its strategy for its cash soon. Now that they have proven that this phase of their business plan is a smashing success - and that it's a cash machine - it begs the question: what next? There has been talk of various ways to broaden the business, and talk of a dividend, but it's not clear which of these routes they are going to take, what are the costs/rewards, etc. You just know that they are getting these questions from heavyweight funds, not just posters on IHub.
I'd like to hear them say something along the lines of 'we are accumulating cash for an acquisition of xxxxx nature', even if they do not have a specific target in mind. And they should settle the question of a dividend, one way or another. Hopefully that's what we hear in December, otherwise - ironically - shareholders are left with an uneasy feeling about the amazing cash flow they are generating.
Mention in Forbes article re a prominent value investor-
http://blogs.forbes.com/schifrin/2010/11/18/your-pushy-wife-may-be-your-ticket-to-billions/?boxes=financechannelforbes
That will be a -very- interesting PR, much more interesting than these boring earnings releases (150% growth, yada yada).
After running from $7's to $16's, the stock churned for 10 days before making a new high - just seems like it takes some time for a base to form that will support the next leg up. Could trade in the $16-18 range until mid-December, agree it would have been nice to see a higher range but there seems to be good support above $16 or so. Mid-December could coincide nicely with news of 2011 planning - didn't Jacki imply a PR was coming around then?
18.40 printed in premarket. eom
I figure CCME is trading at about 3.8x 2010 earnings, minus cash - crazy.
I guess I have a minority opinion, but I couldn't care less that the company didn't use the buyback funds in those last couple weeks of September (we don't know if they have used any since). They set aside $30 million for the purpose, but I would expect them to only buy shares if absolutely necessary and at a careful and deliberate pace. Obviously the stock moved from the $7's to the $20's very rapidly, if that happened purely through market-buying that is better than the company buying shares, IMO.
I also don't take it as a credibility issue, I think that is an unjustified charge that is now being picked up and amplified by bashers on Yahoo. The money was set aside -if needed-, if it wasn't needed then why should they spend those funds on buying stock? Seriously, if the CEO chased the ask from $7-$20 I would then question his judgement.
This management team is sitting on a rocket ship, they know it and are moving at a deliberate pace that is time-appropriate IMO. The biggest mistake they can make is to reactively spend the treasury on promoting their stock or poor acquisitions. They have an opportunity here to take this to incredible heights, but they have to thread the needle in these early high-growth years, where fatal mistakes are usually made. The stock is volatile as heck, but it will return to the $20's and charge forward from there, people seem to forget that value prevails with time.
They've only been public for a year, the space is rife with fraud and the overall market is basically terrified at any given moment - I say give them a break, they're doing a great job and deserve our confidence.
[ok, stepping off soap box, please continue with wringing of hands]
That's true, Larry from OTCJournal.com did not receive any payment from CCME for his articles, as he has from other companies in the past. He simply picked CCME on his own, bought 1000 shares, and wrote about it. This is stated clearly on his website. Besides, I've read his articles and there's nothing exaggerated or false about them.
Funny that the only two negatives Bronte has (this and the bit about the CFO) are both incorrect.
Yeah, I can't stop grinning over this article. Finally the long awaited 'article' arrives... and despite it's cluelessness about the so-called 'negatives', it is a complete capitulation into a bullish rave. He even describes the life-threatening position that some of his short hedge fund friends find themselves in - undoubtedly the people behind the endless bashing on Yahoo - and it is sweet to hear of the consequences they are experiencing for the months of lies they anonymously posted (assuming that was them). Makes me think this dip will be short-lived as many will cover as soon as they perceive a bottom (just as many will buy).
Bronte on CCME - quite an interesting take on how the funds that went short big-time are utterly hosed, how he can find nothing fraudulent about it, how it compares to other ad companies, and how he believes China bus companies must be stupid. Which is quite humorous because his article is rife with errors, lol.
IMO this article, by the blogger who wrote the hit-and-cover on UTA, is a watershed moment for CCME, the end of the short game.
http://brontecapital.blogspot.com/2010/11/china-media-express-wall-street-drama.html
Enjoy, I know I did.
"FWIW we will be getting guidance on 2011 around mid Dec."
That is good to hear, but seriously, is the company's guidance all that useful? I guess it's possible to see it in a relative context to prior guidance. I certainly respect their integrity in maintaining a conservative outlook, but I don't understand why they would take it to the point of near irrelevancy. Not complaining - fantastic earnings speak for themselves - just don't quite get Jacki's thinking on this.
CCME - clearly someone started buying large below $8 a couple of days after the announced buyback, and from then on the buying has been unrelenting all the way to $20+. We can't know if that buying was triggered in part by the company's announcement that it would put a floor in the stock, perhaps the company even knew there were big buyers ready to go if they provided support in the form of a buyback plan. That may have given the right buyers confidence to make a move, from there the company's bids may have just never filled. Who knows?
The purpose of the buyback was to reverse the short attack and fix the chart, IMO, not as an investment of company funds. Whether that happened directly as a result of the buyback, or if it was just a piece of the puzzle, the problem was solved handily and I can't see any reason to complain. I mean, the stock is over $20 less than two months later, hard to criticize management IMO.
Very interested to hear how they are finally going to 'spend some money' on new initiatives, as I believe Jacky stated on the CC. It would be a real positive if they can expand the business model in an accretive way while keeping margins up around 65%, this is where VISN and FMCN ran into trouble. It would also answer critics who ask what's next, where is future growth coming from.
I heard as of Sept. 30 no shares have been bought back.
Thanks for clarifying.
2-3 new airports coming this year!
Does this help? Full text search of edgar.sec.gov for 'mediaexpress' brings up a lot of institutions' filings, I presume these are all significant buyers/sellers of CCME.
http://searchwww.sec.gov/EDGARFSClient/jsp/EDGAR_MainAccess.jsp?search_text=mediaexpress%20OR%20%22media%20express%22&isAdv=false
Definitely hitting the mainstream press, earnings tomorrow should generate quite a bit of news and interest. This thing is still so cheap, I think any pullbacks are going to be shallow and of short duration, as the stock works its way to $30 by end of year. JMHO!
I've held 50k shares since last January, can't tell you how good it feels to know there is a rational universe out there after all, lol. I think I may have questioned my sanity more than a few times these last 6 months or so.
Been waiting for CCME and GOOG to be recommended in the same article - and here it is:
http://articles.moneycentral.msn.com/Investing/CompanyFocus/mad-men-suiting-up-for-a-rally.aspx?page=3
Looks like he traded in and out between ~9 and ~12, perhaps he's back in it now:
"CCME I bought more yesterday and could get going. My stop is 8.10."
http://blog.t3live.com/2010/09/look-for-banks-to-play-catch-up-on-fed.html
"China MediaExpress Holdings Inc (CCME) is opening above 11, not bad considering we had it at $8.50-9.20. It was a three week hold for almost 25% plus. Trades like this one are popping up as market keeps going. Stay tuned."
http://blog.t3live.com/2010/10/all-eyes-on-earnings-imf-and-fed-as.html
"China MediaExpress Holdings Inc (CCME) we had this stock at 8.50-9.25, sold most at 11-12, and it went to 16+ Friday. Wow."
http://blog.t3live.com/2010/10/tale-of-two-tapes-as-nasdaq-leads.html
Harry Boxer - trading target $24 range - Chart of the Day video.
http://www.thetechtrader.com/chartofday/