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CECX Initial Report

COMPANY OVERVIEW
China Executive Education Corp., (“CECX” or the “Company”) provides comprehensive training courses to Chinese entrepreneurs and business executives in the rapidly growing executive education market. The Company aims to improve a client’s business performance by improving the management,leadership, and marketing skills of its employees.The Company also organizes featured lectures from well-known speakers that have included writer Mark Hansen of Chicken Soup for the Soul, top U.S.negotiator Roger Dawson, sales executive Joe Girard, and leadership guru John C. Maxwell.

INVESTMENT thesis• Growing market opportunity. With the rapidly expanding Chinese economy, there are an increasing number of entrepreneurs and business executives who are looking to enhance their skills outside of a traditional education program.
• High-margin business. CECX provides mostly human capital, which
generates very large margins. Last year’s gross and net margins were 67% and 38% respectively, since the Company’s inception in April of 2009 and remain high after becoming a publicly traded company in the US.
• High cash position with no debt. Of the Company’s total assets last year,77% was unrestricted cash. This large cash position can be used to acquire other businesses or to pay new talent to further expand the existing business.
• Little risk of non payment. The Company charges an upfront fee for services for 2-3 years. This fee is mostly paid in cash which is standard for education payments in China.
• Significant goodwill not on the balance sheet. The CEO’s well established reputation and connections allow the Company to more easily attract new customers and world renowned speakers that most competitors can not.
• Undervalued share price. Based only on expected industry and GDP growth rates, CECX is undervalued based on our valuation model. We believe that the Company has a great opportunity to leverage its brand to exceed those expected growth rates, thus making it even more of a bargain.

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