Get Trade Alerts

Signup for Free Email List!

Enter your Email

Preview | Powered by FeedBlitz
To subscribe to the Super Stocks Blog by RSS feeder click on :

Subscribe to: Posts (Atom)

Sunday, March 14, 2010

CCME Earnings Preview

CCME, a stock I have been in since I called it at $7.50 when the symbol was still TMI Read Blog Post, will report financial results for the fourth quarter and year- ended December 31, 2009, on Tuesday, March 23, 2010 before the stock market opens. Following is what I think the results may look like and is my opinion only based on facts that are available.

It is important to note that CCME does not have any analyst estimates to hit or miss right now. So that headline risk does not exist for them on March 23rd. They do however, need to show growth and have a bullish outlook on 2010. Then I believe the analyst coverage and upgrades will be follow.

Let's address both the growth and then potential for a bullish outlook.

Growth 2009 v.s. 2008:
The last earnings information was the Q3 report for the CCME business. Read Press Release Revenue and Net Income for the first 9 months of 2009 exceeded Revenue and Net Income for all of 2008.

Financial Highlights – Third Quarter 2009 vs. Third Quarter 2008

•Net revenues increased 65% to $26.1 million in the 2009 period compared to $15.8 million;
•Gross margin for the 2009 period was 67% of net revenues; •Operating income increased 83% to $15.5 million in 2009 compared to $8.5 million; and,
•Net income increased 83% to $11.7 million compared to $6.4 million.
Financial Highlights – Nine Months 2009 vs. Nine Months 2008

•Net revenues increased 38% to $64.0 million in the 2009 period compared to $46.2 million;
•Gross margin for the 2009 period was 64% of net revenues;
•Operating income increased 45% to $37.2 million in 2009 compared to $25.6 million;
•Net income increased 43% to $27.4 million compared to $19.2 million.

Now as far as Q4 2009, the Company has an internal target of $42m see SEC filing for which management has incentive to hit both because they will receive 1m shares if they hit it and they will be penalized if they miss it due to the recent financing deal they signed with Starr International. Read SEC filing on Starr deal

Since this Starr International deal was signed after 2009, I am going to make the assumption that CCME made more than 42M net income for 2009 and did not sign an agreement that they knew would penalize them because the net income target was already a miss. That would mean 14.5M+ net income in Q4. The net income comparison for Q4 2008 is 7.2m. see page 56 for 2008 results That would mean 100% year over year net income growth for Q4 2009 over Q4 2008!!! That would be a strong headline, whether they strongly beat the 42m target or even come close to it.

In the Q3 press release the CEO made this comment about Q4 --- Mr. Cheng concluded, “Historically, our fourth quarter is seasonally our best quarter. It appears that the 2009 fourth quarter will be no exception.”

And in a press release on Feb 8, 2010, the CFO said this about Q4 - Jacky Lam, CME’s Chief Financial Officer stated, “As anticipated, we believe our 2009 fourth quarter was exceptionally strong. Read press release

CCME had approximately 24m shares outstanding and approximately 10m warrants with a strike price of $5.50 at the end of 2009. Estimated fully diluted shares outstanding according to GAAP using the treasury method will be approximately 29m at the end of 2009. EPS for 2009 should be approximately $1.45 if they hit the 2009 $42m net income target. CCME was a SPAC and they acquired the CCME business in Q4 2009. Recently another SPAC reported earnings and used the GAAP treasury method to calculate EPS. Read Press Release (CCME has approximately 38.5m shares outstanding here in March 2010 so it would be approximately $1.09 EPS if you choose to look at it in a non-GAAP manner for comparison.)

Growth 2010 v.s. 2009:

The 2010 net income target for management is $83.5m. This would represent 99% growth over 2009 net income assuming they hit the 42m target. Management has strong incentive to hit this target as they would receive 7m shares!. The penalty on the Starr deal would be if they have less than 55m net income in 2010.

On March 8, 2010 (last week), the CFO said they expect to have 50% organic growth and then seek an additional 50% growth from acquisitions with their cash war chest of $100m. Listen to webcast at 22:40 into it Just last week the CFO said 50% organic growth in 2010 and another 50% growth from acquisitions. Does that sound like a Company about to warn for 2010??? No the outlook for 2010 was given at that conference and it was bullish 50-100% growth. CCME should have approximately 39.5m shares outstanding (assuming they hit the 42m net income). If they hit just the 50% organic growth that would be approximately $1.60 EPS for 2010. (42 X 1.5 / 39.5m). If they achieve the $83.5m net income target that would be approximately $2.11 EPS for 2010. (83.5 / 39.5)

Reasons why CCME deserves a high P/E multiple of 15 - 20 :

1) Growth - 100% YOY Net income growth 2009 over 2008 and potential to do 50-100% again in 2010 over 2009.

2) Barriers to entry - CCME has an exclusive license from China's Minestry of Transportation to install in-vehicle television systems on buses traveling on highways nationwide. (Page 12 of the March 9 presentation)

3) Extremely high Gross Profit and Net Income margins - 64% Gross Profit and 43% Net Income for first 9 months of 2009.

4) Strong cash flows - $30m cash flow generated from operations for first 9 months of 2009.

5) $100m of cash and no debt

CCME with only 50% organic growth in 2010 and EPS of $1.60 :

10 P/E would be $16 price per share (would be very low P/E for this type of growth - shown to illustrate that CCME is currently undervalued)

15 P/E would be $24 price per share
20 P/E would be $32 price per share

CCME with 100% targeted growth in 2010 and EPS of $2.11 :

10 P/E would be $21 price per share (would be very low P/E for this type of growth - shown to illustrate that CCME is currently undervalued)

15 P/E would be $31.65 price per share
20 P/E would be $42.20 price per share

Lastly, here is another Chinese Bus competitor (although they are more inner-city and not public in US) and this is how they are doing and what they said for 2010.
Read Press Release

8 comments: said...

CCME file form "NOTIFICATION OF LATE FILING". Not sure if this is a good news or bad.

But the reason ...

We anticipate a significant change in our results of operations from the corresponding period in the last fiscal year due to our former status as a shell company. Based on currently available information, we anticipate reporting net income of approximately $41 million for the year ended December 31, 2009.

So they missed by $1 million?

Superman said...

They did not miss analyst estimate because there was not any analyst estimate....$42m was management incentive target.....this is actually perfect because they do not have to issue 1m shares to managmenet now and less dilution.

sanjeev said...

Indian stock market tips is one of the fastest growing markets. Major stock exchanges like NSE and BSE are also growing in terms of volume, traded contracts and turnover on regular basis.

Now the question is how to select best stock pic of the day for Sure Shot Tips and Mcx Tips ? In this regard Commodity Tips comes into the play.

At Sharetipsexpert we assure you high accuracy and our tips are based on technical analysis.

Once you comfortable and gains confidence than no one can stop day traders and investors from earning profit from the stock market.

Have confidence and trade without emotions and see how things changes for you in short while.

Free Mcx Silver Tips || Free Mcx Copper Tips

commodity tips said...

Very good post, I was really searching for this topic, as I wanted this topic to understand completely and it is also very rare in internet, that is why it was very difficult to understand.
Thank you for sharing this.
<a href=""

share tips said...

Very good post, I was really searching for this topic, as I wanted this topic to understand completely and it is also very rare in internet, that is why it was very difficult to understand.
Thank you for sharing this.
share tips

share tips said...

I read your post . it was amazing.Your thought process is wonderful.The way you tell about things is awesome. They are inspiring and helpful.Thanks for sharing your information and stories.
share tips said...

I like your article and it really gives an outstanding idea that is very helpful for all the people on web.
great blog! i learn few things in this post, thanks for the share.

richa88 said...

Hiiii,Nice article. I was checking constantly this blog and I’m quite impressed! Very useful information.Great Post and very good articles. You are doing very good job, keep posting articles. I will suggest all my friends to go this post. Thanks & Regards stock tips

DISCLAIMER is simply a blog that has information on stocks that the author Superman, likes or may trade. The author may, and usually does have positions in some of the stocks discussed on the site or in email alerts and is under no obligation to disclose the size of the position or the time that it was acquired. The author also reserves the right to buy or sell at ANY time before during or after it is mentioned on this site or an email alert, with no notice or warnings. The posts are not at all intended to be recommendations for anyone else to buy, sell, or hold. Investors should not rely on the information given by this site to make investment decisions.

No contributor of the his site is a registered investment advisor or a broker / dealer. We DO NOT recommend whether to buy, sell, or hold securities . Although we believe the information on this site to be accurate, we DO NOT GUARANTEE the accurateness and completeness of statements made regarding stocks discussed on the site or in email alerts.

The performance section provides information to the public on selected stocks profiled by this site. Past performance should not be used as an indicator of future performances. We try the make the past performance section as accurate as possible but DO NOT GUARANTEE that the information is accurate.

This web site and all email alerts sent by this site contain "forward looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21B of the Securities Exchange Act of 1934. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, goals, assumptions or future events or performance are not statements of historical fact and may be "forward looking statements." Forward looking statements are based on expectations, estimates and projections at the time the statements are made that involve a number of risks and uncertainties which could cause actual results or events to differ materially from those presently anticipated. Forward looking statements in this action may be identified through the use of words such as "expects", "will," "anticipates," "estimates," believes," or statements indicating certain actions "may," "could," or "might" occur.

If any part of this disclaimer is not clear, please take the time to consult an attorney or investment specialist. Please take caution in all investment endeavors and good luck to all.

Again, My messages are not investment advice, investment solicitation or the like. Do not take action based on my messages. I do not guarantee or make claims to the accuracy of anything I post. I may buy or sell any securities I mention at anytime, even prior to posting. It is my opinion, that individuals should perform their own due diligence before investing in any stock at anytime and not base decisions on messages posted by other individuals. Individuals should assume 100% responsibility for their own investing. My messages are for my own entertainment only. LOW FLOAT stocks in particular can be volatile and are not for new traders in my opinion. I am not a registered investment advisor in any shape or form, please do not ask me for ANY investment advice.

Welcome to, blog home of Superman. Purpose of this blog is for me to discuss my trades and stock ideas (As well as opinions and rants on stock market related issues). I will mention the date and price I enter. As far as exits, I always try to take half off when I have some profit and if I believe in the stock, let the rest run further. I always also use mental stop limits, at which time I would exit and minimize any losses. I do not like to give price targets unless I can support them by P/E in some way or by comparison to another stock. I just post stock trades and ideas that I believe will go higher (or lower for shorts) and the reason I believe that. Individuals should have their own strategies for managing profits and losses. My stock picks tend to NOT be daytrades at all and many take time to move. I am not an investment advisor and this blog should not be considered or followed as investment advice.