China MediaExpress Holdings, Inc. (fka CCME)

[Aggie9518]

Reading thru the report, the $28.00 target does not include acquisitions. Management has already said growth for 2010 would be 50% organic and 50% acquisitions. IMO...$28.00 very conservative. Am I reading too much into this???? Aggie....

page 4 of report.
New embedded advertising and other factors should drive strong 2010 growth
In the third quarter of 2009 CCME launched a new embedded advertising initiative that was the driver of a
large portion of the sequential growth in the quarter. Embedded advertising allows advertisers to be the
exclusive sponsor of a specific program in return for paying a higher CPM to CCME. The advertisers gain
additional exposure from announcements that the program is sponsored by that advertiser and a banner
add is placed on the side of the screen displaying the logo of the advertiser during the broadcast of the
programs.
Additional drivers of growth in 2010 are expected to come from:
1. Advertising rate increase of 10%: Raising rates by 10% is reasonable considering CCME’s low
CPM rates and expectations for a strong advertising market as evidenced by:
o The strong November CCTV 2010 advertising auctions
o Reports that VISN and Focus Media (NASD: FMCN) have raised their rates by 10% to
20% in January
o Changes in government regulations that reduce television advertising time which has
caused local television stations to increase their rates by 20% to 30% to make up for their
lost inventory
2. Substantial increase in advertising inventory: Management’s goal is to increase the number of
buses to 30,000 by the end of 2010 for a 50% year over year increase. This appears reasonable
given the rate of new bus growth since June of 2009. For conservatism we assume 28,000 buses by
the end of 2010 in our model.
3. New acquisitions: $77M of capital was raised in the last two weeks of January from the Starr
International preferred investment and the SPAC public warrant redemption. Management expects to
deploy CCME’s excess cash of $100M+ towards acquisitions in the near future. For conservatism we
do not include the contributions from acquisitions in our financial model. ]