Replies to post #10487 on China MediaExpress Holdings, Inc. (fka CCME)

[pedro45]

"People are so jittery about this stock (not so much the regular contributors to this Board), the last thing we need is for a panic to ensue because (gulp!) 4q comes in less than .80 due to SWITOW start up costs like Marty models or because some seasonal weakness in Q1 brings TTM EPS in at something like 3.15 after Q1. [I still don't think this is going to happen]. This would clearly be a case of losing the forest through the trees."

That is essentially what I was trying to say earlier. At some point the street is either going to recognize the strength of the business model (and be OK with a slight EPS miss if there is one, as long as the revenue growth is on track) or it isn't. If it doesn't the stock will still do well. If it does then we get multiple expansion and it is off to the races.

In the day to day, crunching the numbers affords everyone the opportunity to understand the company better, which instills confidence. Confidence that, despite Yahoo updating 2011 estimates to reflect Aftahi's current outlook, we know they are still far too low. And we know that because of his ultra conservative assumptions on bus network growth and because he has modeled for a 12% rate increase when something between 15-20% is more likely. As for GH, it is safe to assume their numbers have not been revised since the SWITOW announcement, the divi announcement, or since the new buses have been added.

One point about Q4 expences. When Aftahi questioned Jacky about the conservatism of his F/Y NI guidance during the last CC Jacky mentioned it was in part due to trials they were doing for expansion into the tour bus area. Hopefully we get more color on this during the next call. But the main reason I bring it up relates again to how the street views a possible hit to NI now that will eventually bear fruit in the future. Just as it should with the SWITOW initiative. With the ace in the hole being the $200M in cash and the flexibility it gives management to make an accretive acquisition.

So yes, short term results are important. They provide momentum. But just as important for the long haul are all the irons in the fire. Now it's a matter of execution, which so far has proved to be one of their strengths.