notes from meeting with CFO George Wung
Company expects to cover all capital outlays of recently announced projects from working capital and operating cash flow.
The company only has one set of books. Revenue sharing agreements with local govts means that the government is watching ticket sales closely. I was told that SAIC would match SEC if I looked.
Yunding opening this month, 300,000 visitors expected in 2010, 500,000 next year.
"Ineffective internal controls" means they need more U.S. GAAP training. Hong Kong firm arrived yesterday to work on strengthening controls.
Have one analyst covering, about to gain another. Goldman Sachs and Carlyle to visit this month.
Current CFO plans to stay for awhile and stock options plan should start next year.
CEO very concerned about dilution, does not want to dilute the stock. Now that their current business is generating healthy cash flow, there is no need to raise capital.
Land use rights recently awarded will be recognized in pieces. 1/3 will be recognized at the end of the year. Local government has an annual quota and can not technically give out all the land at once. Value will be determined either by using nearby land prices or selling a piece of the land. Company plans to keep the land and develop vacation real estate.
2nd television station still in the works, possibly a satellite tv station that will be available nationwide as well as outside of China.
10 more projects, not including 3 newly announced, are in the pipeline. Focusing on projects in provinces that don't already have very well known destinations.
Exclusive content provider on high speed train tvs. 20 minutes out of every hour. Infomercials about tourist destinations include soft advertising, such as hotel suggestions. no other company is currently operating in this space. The government-run railway company does not want to pollute the train environment with straight advertising. you will not see lebron james drinking a coke on the train tv.
GGL projections for this year were 20% over last year, but flooding this summer will bring that down to just a little growth. Tulou projections were 180,000 this year, actually it will be more like 280,000.
Tourism companies can only apply for a price increase every three years. Last price increase was in 2008.
Government likes working with CNYD. CNYD had competition bidding for Yunding project. Competitors offered a lot of money and only wanted 25 years of management rights. CNYD got it for free and 40 years of management rights.
CNYD has had many investors meet with them in the past year, and many don't understand the synergy. The synergy is what makes this company.
