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Never underestimate the power of fear. Likewise, never underestimate the power of greed. The market when confronted with a catalyst almost always overreacts. The inefficiencies of the market are what can give you out-sized gains and likewise out-sized losses if one is not careful. If the stock is sick, it doesn't mean the company is sick. So when does the stock price trade at a multiple that makes sense? When the money managers decide it's time for multiple expansion. End of story. So given that your thesis regarding a company is correct, then one has to be patient enough for the stock to eventually come into favor and express a justifiable multiple. Some company's are so wildly profitable that they occasionally can force the hand of the MMs, and can change the opinion of their whole sector. With the margins and growth they are maintaining I think CCME is one of those rare investment opportunities that you're lucky if you can catch even one of them.
Here's a excerpt of an earlier piece by Kate Stalter on RealMoney:
"A couple of companies from the industry sport significantly stronger earnings growth than Focus Media. China MediaExpress Holdings (CCME) reverse merged in October 2009 with TM Entertainment & Media, a so-called blank check company that was incorporated in Delaware with the purpose of acquiring or merging with an existing business.
ChinaMediaExpress operates the largest advertising network on inter-city buses in China, with installations in 23,200 buses. Airport buses are key to the company's growth. Its customers include Toyota, Pepsi (PEP) , Coca-Cola (KO) and Siemens (SI) .
It has a stellar track record of earnings growth going back to 2007. In the past eight quarters, earnings grew from 16 cents to 81 cents a share. Quarterly sales grew from $18.8 million to $57 million. Wall Street expects 47% profit growth this year, to $2.66 a share. In 2011, however, analysts see an increase of just 8% to $2.87 a share. [This will prove to be way too low. JB]
The stock is trading about 31% below its November all-time high of $22.30. It's a small-cap, with a market capitalization of around $526 million, and trades about 1.2 million shares a day." RealMoney 12/16/10
Back at you... Not my work, just a good find.
The "Institutional Nibble", the key to building a position without running up the price.
Welcome aboard! What he said...
Even the YMB has an occasional gem...
From a Motley Fool contributor, the best defense of CCME yet:
Message part 1:
"Seriously? You're going to trust some greedy shortsellers with a "conflict of interest" profit motive for bashing over some FAR MORE legitimate sources?
CCME has been thoroughly vetted by not one but several sources:
First, the original SPAC co. TMI, which was looking for a superior company with which to merge in early 2009. Then Starr Int'l, founded by Wall Street legend and pioneering China biz expert Maurice "Hank" Greenberg. Before doing a $30M PIPE investment in CCME (completed in Jan. 2010), Starr engaged THREE outside investigators to spend 4 months closely examining CCME's business model, its finances and its legal status. Starr then insisted that one of his people, Dorothy Dong, have a seat on CCME's board starting last Jan. (2010), and since then she’s had ongoing access to all co. books. She and Greenberg must like what they see, because Starr/Greenberg bought another $13.5M worth of COMMON shares in Oct. 2010.
CCME was more recently vetted (from late Spring 2010 onward) by independent analyst firms Northland Securities and also Global Hunter --the latter's senior analyst Ping Luo went on record back on Oct. 15, and once again after the Citron hit piece last Monday, to specially note that she and colleagues had done wide-ranging channel checks with bus operators and advertising clients and brokers to obviate any possibility of fraud with CCME and confirm the cashflow and cash holdings. GH and Ping Luo are putting their reputations on the line with their staunch defense of CCME against fraud charges.
Another independent analyst joined Ping Luo in leaping to CCME’s defense last Monday morning when the deceitful Citron “Research” piece against CCME came out by...Andrew Left. That's veteran analyst Darren Aftahi of Northland Capital (who used to cover CCME's out-of-home advertising peer FMCN when at ThinkEquity), who has also had a 'strong buy' rating on CCME since last July. Both Global Hunter and Northland Cap. reiterated their strongest 'Must Buy' ratings last week, and Northland clearly reiterated that CCME is their “top pick” for 2011 among 97 stocks in their coverage, and CCME is only one of 2 or 3 China cos., so that is a remarkably confident pick. "
Part: 2
"CCME’s auditor is the #1 firm in the world, Deloitte Touche Tohmatsu, which audited not only CCME’s 2009 10-K filed in March 2010, but also has reviewed their Q1, Q2, and Q3 10-Q reports and is well along in its most recent auditing of the 2010 10-K.
We could also mention the growing institutional ownership of CCME shares by major entities from GS to CALPERS...
And has a 99 composite rating from IBD.
And that CCME was rated #1 most promising pick for 2011 by Forbes China on Jan. 10.
And that CCME is the biggest holding of Mike Koza, rated the #1 stockpicker of the past 5-year and 10-year period by Marketocracy and Forbes (see several "Buffetts Next Door columns" by Ken Kam and Matt Schifrin).
Last but not least in the vetting of CCME is that done by several major retail investors, who own about 9% of CCME's share-float, most of whom attended CCME's Investor Day last September. These shareholders have openly posted at InvestorsHub.com, Yahoo m.board, and Seeking Alpha about their methods to determine that the bus counts and operations are quite real. For instance, see the fine d.d. blog by "WCTBills" (http://ccme-info.xanga.com) with ample video archival footage and brief interview material (with bus operators, et al.), and extensive refutation of recent shortsellers' lies and wrongful omissions of fact.
CCME's CFO Jacky Lam is a former auditor for 8 years with PWC (Price Waterhouse Coopers). He is very responsive to shareholders, unlike many or even most CFO's you'll ever try to contact. Email him at jackylam (at) mediaexpress.com.hk if you have further Qs.
So who are we gonna believe here? The lying, manipulative shortsellers? Not me! I've been buying more CCME at these crazy low prices...."
I agree, the upside blows away the downside exponentially.
I agree, the Hedgehogs had a ball with this one - it's fair game, seeing how they're "Outsiders in more ways than one." And that is why this will be so funny. So many eyes are on this and once Wall Street gets a load of the earnings growth - greed will kick in. Gordon Gecko is no dummy.
Dunno... Don't worry so much, probably want the report to be distributed through it's own channels.
Global Hunter CCME Report is available here:
Global Hunter CCME Report
CCME vs CHRM
In terms of key metrics comparing CHRM with CCME is interesting as CHRM like CCME only has two analysts covering it (2 Buys, Paul Keung of Oppenheimer & Co., & James Marsh of Piper Jaffray), and has only traded since May 2010. Keep in mind the growth of CCME has accelerated in recent quarters and so is toned down in its TTM numbers due to the earlier quarters being before the accelerated growth. Also CCME has considerable value added through higher margin airport buses, tour buses and the Switow catalog & website which will impact future earnings considerably.
CCME
Valuation (MRQ)
Price/Earnings (TTM) 5.55x
Price/Sales (TTM) 2.59x
Price/Book 2.79x
Price/Cash Flow 3.75x
Profitability (TTM)
Gross Margin 71.93%
Operating Margin 65.94%
EBITDA Margin 67.52%
Profit Margin 49.26%
CCME's Gross Margin is more than 92% of other companies in the Advertising industry, which means it has more cash to spend on business operations as compared to its peers. As indicated by the Operating Margin, CCME controls its costs and expenses better than 98% of its peers.
Growth Rate (TTM)
Earnings Per Share 42.9%
Sales 131.5%
PEG Ratio .22
CCME's EPS Growth Rate is greater than 61% of its peers in the Advertising industry.
-----------------------------------------------------
CHRM
Valuation (MRQ)
Price/Earnings (TTM) 24.09x
Price/Sales (TTM) 2.54x
Price/Book 2.05x
Price/Cash Flow 20.38x
CHRM's P/E Ratio is greater than 68% of other companies in the Advertising industry. This typically means that investors are willing to pay more for its level of earnings relative to future growth.
Profitability (TTM)
Gross Margin 35.73%
Operating Margin 21.20%
EBITDA Margin 21.20%
Profit Margin 20.43%
CHRM's Gross Margin is comparable to other companies in the Advertising industry, which means it has relatively the same amount of cash to spend on business operations as its peers. As indicated by the Operating Margin, CHRM controls its costs and expenses better than 86% of its peers.
Growth Rate (TTM)
Earnings Per Share 513.9%
Sales 59.3%
PEG Ratio .30
CHRM's EPS Growth Rate is greater than 98% of its peers in the Advertising industry.
Result: CHARM COMMUNICATIONS INC while a good story. By comparison, due to the stellar margins and considerable moat of CCME it will become evident in the coming quarters (or even sooner) how remarkable CCME really is as an investment in the China growth story.
Respecfully, John B.
Source: ETrade 03/05/11
CCME vs FMCN
In terms of key metrics comparing FMCN with CCME is interesting given that FMCN was recently added to the Goldman Sachs “Conviction Buy” List. Especially when you consider CCME growth has accelerated in recent quarters and so is toned down in its TTM numbers due to the earlier quarters being before the accelerated growth.
CCME
Valuation (MRQ)
Price/Earnings (TTM) 6.03x
Price/Sales (TTM) 2.81x
Price/Book 3.03x
Price/Cash Flow 4.08x
Profitability (TTM)
Gross Margin 71.93%
Operating Margin 65.94%
EBITDA Margin 67.52%
Profit Margin 49.26%
CCME's Gross Margin is more than 92% of other companies in the Advertising industry, which means it has more cash to spend on business operations as compared to its peers. As indicated by the Operating Margin, CCME controls its costs and expenses better than 98% of its peers.
Growth Rate (TTM)
Earnings Per Share 42.9%
Sales 131.5%
CCME's EPS Growth Rate is greater than 61% of its peers in the Advertising industry.
Management Effectiveness (TTM)
Return on Assets 60.98%
Return on Equity 69.78%
Return on Inves. Capital 67.67%
The Return on Equity for CCME shows that it is able to reinvest its earnings more efficiently than 98% of its competitors in the Advertising industry. Typically, companies that have higher return on equity values are more attractive to investors.
----------------------------------------------------- --------------
FMCN
Valuation (MRQ)
Price/Earnings (TTM) 116.80x
Price/Sales (TTM) 7.25x
Price/Book 3.16x
Price/Cash Flow 20.38x
Profitability (TTM)
Gross Margin 54.20%
Operating Margin 10.10%
EBITDA Margin 12.62%
Profit Margin 7.30%
FMCN's Gross Margin is more than 77% of other companies in the Advertising industry, which means it has more cash to spend on business operations as compared to its peers. As indicated by the Operating Margin, FMCN controls its costs and expenses better than 74% of its peers.
Growth Rate (TTM)
Earnings Per Share 103.1%
Sales 14.8%
FMCN's EPS Growth Rate is greater than 85% of its peers in the Advertising industry.
Management Effectiveness (TTM)
Return on Assets 2.84%
Return on Equity 3.12%
Return on Inves. Capital 3.29%
FMCN's EPS Growth Rate is greater than 85% of its peers in the Advertising industry.
Result: While CCME is a smaller company, there is more room for growth and margin expansion - not to mention multiple expansion. I meaN: FMCN PE 116.80 vs CCME PE 6.03. If you back out the cash CCME has a PE around 3. As we move forward, the comparison will become even more evident which is the better horse in this race. In other words... Wow!!!
Respecfully, John B.
Source: ETrade 2/24/11
Sentiment : Strong Buy
(reposted)
Here in Michigan, since the 90s, it is a "single party" statute. This means any one ("single party") can record a call, permission from the other "party" is not required. Before you had to have a "beep" every 20 seconds to inform the "party" it was being recorded. It's a state by state statute. If I did this to a "party" in another state - that's when the trouble begins. In HK who knows, but I doubt it is illegal as they are so obsessed with surveillance - "Big Brother."
I agree and I believe it is illegal at least in the US to record a conversation without the person's consent. I know I have heard that message "this call is being recorded", etc. many times.
The truth is CCME already announced their plans for a dividend (5-10% of profits, almost unheard of in a small cap growth stock) and a buy-back. SWITOW website is not priced into the stock, any traction on this could be huge. Airport buses coming online, Mongolia coming online. Margin expansion by raising rates and more in-house AD accounts. Perhaps acquisitions. Who knows? If you read Jacky's response I'm sure for him it's a point of honor to come out running.
That's what I've said all along. Why fall into guerilla tactics, that's what Shorty wants. Just Nuke em at earnings with multiple assault... Shock & Awe!
Green on a down day 13.338 +0.158 +1.19%. Shorty is that all you got?
Top China Small Cap Picks of 2011: Performance Year to Date, by N. Greene
Top China Small Cap Picks of 2011
Yeah Bwawawawhaha!
Don't forget:
"An SEC staffer in San Francisco subpoenaed the communications of Jim Cramer, Herb Greenberg, Bethany McLean, Carol Remond and a handful of other “journalists” suspected of colluding with Gradient Analytics and short selling hedge fund Rocker Partners, only to have SEC Chairman Chris Cox personally sabotage the effort. This was followed up almost immediately by the SEC vindictively subpoenaing Patrick Byrne."
The stories behind the Rocker and Gradient lawsuit story
"Anything worth doing, is worth doing right." I like the "rope-a-dope" analogy. The company should focus on priorities, not on whether someone might have expiring March $17.5 ~ $20 calls!
Nice one Doc!
Daily looks like an EKG...
Especially Chinese companies. Herb G. and Cramer who referred to investing in China as a "Black Hole."
"And Greenberg is the least reputable reporter on the network with a clear bias against companies." jmo
Thanks... Emotion got the best of me. What a snake-oil salesman...
I wonder how many of Herb's buddies are short this puppy!
All Herb is trying to do is inject fear into the market, what a hosehead! Legally, he's helping establish "reasonable doubt" for Mucky Wawa.
He's trying to protect his hedge fund buddies. Not working so far...
The shorts have been hoodwinked, what a load!
hoodwink
vb (tr)
1. to dupe; trick
2. Obsolete to cover or hide
[originally, to cover the eyes with a hood, blindfold]
Shorts shooting blanks, can't seem to stop the geyser...
If we get there today, should be some profit taking around $14.46
In theory, yes. But it will be interesting to see how real the SEC rule is. So far, it looks like: "These things are allowed, but not permitted."
Not much resistance to the upside. Ballpark figures, once it gets past $14.46 next stop $16.61 then $22.81... Then, unexplored territory...
It just says: "January 2011"
Yup! CCMWEEEEEEEEE!!!
The CCME Ivestor Fact Sheet says:
"Shares Outstanding 36.9 million Free Float Approx. 14 million"
The bus company could verify
Oh, that's right I remember...Thanks
So this is wrong?
schaeffersresearch