Looking to educate the highly populated provinces of China and expand exam prep in certain provinces
Exam prep and vocational training are the two main businesses
Revenue $8.62m 1Q10 – 8.2m (2009) = 5% increase YoY Gross Profit = 12.3% increase Operating Income $3.9m 1Q10 -3.37m (2009) Operating Margin increased 45.3% for 1Q10 Net Income $3.66m 1Q10 = a 11.7% increase ($3.28m in 2009) Diluted EPS 0.12 compared to 0.13 to last yr High demand in vocational training
Stock option compensation and office rent increased costs for Company
Cash of $68.57m ? lays a good foundation for expansion and they plan on acquisitions within 9 months
Working Capital $70.2m
Educational industry in China is a an extreme growth sector, focused on building brand and capturing more market share in 2 business markets (online education and vocational training) Accelerating marketing efforts by the alliance with Beijing Magazine
Expect to experience growth in their business line organically Confident in growth and increased earnings in 2010.Looking for revenue and EPS growth of 30% (most being organic growth) in 2010 (not implying any expansions with the 30% figure)
1Q is slowest business quarter due to Chinese holidays – in future quarters they expect increased growth in remaining quarters
Expect continually higher Gross Margins for remaining Q’s
It must be emphasized that 1Q is always the least productive quarter due to Chinese holiday
Not planning on purchasing back stock with the cash...only planning on making investments and acquisitions
When looking at 2010 figures you should compare it to 2008 not 2009 because 2009 they experienced rapid growth throughout provinces.
Cash use: 25% for self expansion of sales (internal expenditure) and 25% investment on new project (new business lines/entities) , keep 25% for working capital, 25% for acquisitions
Online education tax rate is 15% due to “high technology” status (vocational is 0%)
Pleased with the quarter overall and excited about growth potential in 2010”
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.