China MediaExpress Holdings, Inc. (fka CCME)

[DragontoadX]

Variant View Research "equipment efficiency ratio" argument

I was just re-reading this article and comments:

http://seekingalpha.com/article/252032-china-mediaexpress-the-most-polarizing-stock-in-the-world

It seems as though this argument has some logic to it and was not debunked adequately for my taste in the comments.. does anyone here have any thoughts?

For the period from 2008 (year-end) to 2010 (Q3 or run rate for revenues):

Display network equipment, gross of depreciation, grew 39%

Bus count grew 53%

Revenues grew 227%

I define “equipment efficiency ratio” as revenue $ per equipment $. This ratio grew by 135% over this period. However, ad rates grew only 16% (to Q2’10). Ad minutes grew by 33% due to the addition of embedded ads. This leaves a gap of ~80% unaccounted for. It does not make a significant difference if we substitute bus count for equipment $.