redman, I have a couple of comments on your nice analysis of CNYD. First, I think you are in the right ballpark with an estimate of 2.06 for FY10. I have a bit more of an aggressive projection in terms of top line growth, as I lay out below.
A statement from the December Investor Presentation indicates they believe they will be able to effectively raise prices every year. 'Visits to tourist attractions are predicted to increase at CAGR of 8% between 2008 and 2013, with annual average growth in value of 13%.' So they project their tourism revenue will improve by 13% every year with only an 8% increase in visitors.
I think this is looking at global conditions in all of China, not specific to the trends at GGL, Tulou, or Yunding park. In essence, the company has been nearly doubling visitors every year to GGL since it took over management of the lake. I think Tulou (and eventually Yunding) will see similar rises in visitors per year for a least a few more years. GGL can handle perhaps 25-30,000 visitors per day (from the company), and even on their busiest days during the past year they are still at less than half current daily capacity. I think GGL might see close to 1MM visitors this year, and I'll accept the company's numbers for Tulou and Yunding. Using similar revs/visitor, I get Tourism revenues of 43.5MM.
On the advertising side, I am expecting a slowing growth rate; perhaps down to 15% organic growth vs FY09. I put in 34.5MM in revs for the FETV segment.
Journey thru China is projected to add another 7.5MM in revs in FY10.
Here is my final income statement projection for FY10:
GGL...................30500
Tulou.................4,000
Yunding...............9,000
FETV.................34,500
Journey thru China....7,500
================================
Total Revenue:........85,500
Pretax Margin:..........68%
Pretax................58,140
Tax Rate................25%
Net Inc................43,605
FDS....................20,000
FD EPS.................2.18
I think the company deserves at least a 10-12x multiple, so I think FV in FY10 will be 21.80 - 26.16.
Other comments:
1. pretax margin is conservatively estimated to remain at similar levels as in FY09, but if tourism and advertising (JTC) take on a proportionately larger share of revenues, then I agree that pretax margins could trend higher. There will be some added depreciation/amortization from the construction of Yunding, but it shouldn't impact margins that significantly.
2. Additional acquisitions are likely to positively impact future numbers. New TV station contracts would have the most immediate beneficial impact but another tourist site will also provide potentially more explosive growth in FY11 and beyond.
3. Hopefully this capital raise, which was larger than originally anticipated, will be enough to satisfy the working capital and expansion needs of the company for the next year or two.
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