China Small and Micro Caps

[redchipir]

(CBLY) Research Update $5.00 PT

Q1 FY12 Research Update


China Bilingual Technology and Education Group, Inc. (“CBLY” or the “Company”) reported its first quarter result on January, 2012. Due to the acquisition of the new school, revenue for the first quarter increased 74.0% year-over-year to $10.4 million. Net income decreased 76.1% year-over-year to $0.65. EPS decreased by $0.07 from $0.09 to $0.02. Although net income and EPS results don’t seem perfect, we believe they will recover and go higher as consummate acquisition should provide more opportunities and space
for CBLY to grow

Strong cash position with favorable conditions for future expansion.
The Company had cash and cash equivalents of $9.0 million as of November 30, 2011. CBLY enjoys high cash flow with limited exposure to cash collection risk due to the prepayment model and no accounts receivables. As prepayment of tuition fees for future
years comes with a discount, a significant portion of the Company’s customer base opts to prepay tuition fees a year or more in advance. In addition, a clause which nullifies refunds on prepaid fees after the first three months of a school year discourages student withdrawals and guarantees a lower rate of attrition.