China MediaExpress Holdings, Inc. (fka CCME)

[Shengli]

CBS Marketwatch Evaluating hot Chinese stocks
( edited to show CCME part only )

http://www.marketwatch.com/story/evaluating-hot-chinese-stocks-2011-02-01

China MediaExpress Holdings Inc.

“Cheap” Chinese stocks — those selling at low prices equivalent to five or 10 times earnings — are often suspect as potentially fraudulent. However, individual investors might find China MediaExpress Holdings Inc. (CCME 16.66, -1.18, -6.61%) worth a look, if only because recent data indicate several institutional investors have done their due diligence and are beginning to take positions in the stock.

Such votes of confidence from large institutional investors — accompanied by the commitment of their investment dollars — are often a highly constructive sign for new or emerging companies.


In addition to increasing institutional interest, China MediaExpress also has a strong business model. Far more Chinese workers commute on public transit than do Americans, and CCME’s advertising services are currently featured on around 25,000 buses, with another 10,000 due to be added over the next few years.

The company is also taking advantage of its position in the bus-advertising market to steer customers to ads on CCME’s company-operated Web portal. Clients can run ads on the site, as well as in a soon-to-be-launched magazine, and customers can respond to these ads by placing orders online.

CCME was recently ranked No. 1 in the Forbes China 200 survey. This list features small- to mid-sized Chinese companies considered to have the most potential based on various metrics, including three-year weighted average revenue growth rates, return on assets, return on equity and operating margins. Over the past five quarters, China MediaExpress has grown earnings at rates of 87%, 44%, 50%, 100%, and 45%, respectively, while revenues have risen by 66%, 91%, 137%, 180% and 118%, respectively.

Based on recent chart patterns, the stock looks poised to break out to new highs above the $20 to $22 price level, and we would view it as a buy within its current trading range.