China MediaExpress Holdings, Inc. (NYSE Amex: TMI; TMI/U;
TMI/WS), China’s largest television advertising operator on
inter-city express buses, today announced the financial results of
the Hong Kong Mandefu Holdings Limited (“CME” or “Company”) for the
three and nine months period ended September 30, 2009.
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; and,
- As of September 30, 2009, the
Company had $40.9 million in cash and cash equivalents with no
debt.
Zheng Cheng, CME’s Founder and CEO, commented, “2009 has been a
year of transformation as CME became a public company. We have
taken several steps to further strengthen our position as the
market leader in the express bus advertising industry in China and
to take advantage of new opportunities ahead. We are well
positioned to capitalize in the rapid increase of the advertising
spending, as China is the second largest advertising market in
Asia, and one of the largest and fastest growing markets in the
world. We have placed our Company in several large Chinese markets,
including the five municipalities of Beijing, Shanghai, Guangzhou,
Tianjin and Chongqing. Third quarter and nine month results are an
indication that our efforts have been successful. Our net revenue
and net income for the first nine months of 2009 have already
exceeded net revenues and net income for full year 2008.”
Mr. Cheng added, “We continue to expand our operations, both in
the areas where we have a strong presence and in new areas as well.
As of today, our network includes 46 bus operator partners, up from
40 in mid-September, with whom we have entered agreements for terms
ranging from five to eight years. The total number of buses
equipped with our television systems is now over 20,000, increasing
approximately by 2,000 buses since mid-September. In the fourth
quarter, we plan to further expand our geographic coverage through
the signing of several new agreements with the new bus operators.
Our network now covers the municipality of Guangzhou, China’s third
largest city, after Beijing and Shanghai and also the province of
Shanxi.”
Mr. Cheng continued, “Our platform has attracted numerous
well-known international and national brands to our advertising
network. More than 500 advertisers have purchased advertising time
on our network either through advertising agents or directly from
us. Our clientele includes local brand names as well as those
well-known international and national brands such as Coca Cola,
Pepsi, Siemens, Hitachi, China Telecom, China Mobile, China Post,
Toyota, Bank of China and China Pacific Life Insurance.
“In addition to accelerating our top line growth, we are also
working to improve of our profit margins. In that regard, we have
increased our sales force to 65 people to focus on direct
advertising clients, where we enjoy a better margin compared to
clients signed through advertising agencies. At the end of 2008,
direct clients accounted for only 2% of our net revenues. For the
first nine months of 2009 direct clients represented 16% of our net
revenues from those advertising timeslot. We expect this percentage
to reach 20% by year-end and approximately 40% by the end of
2010.
“In the third quarter, we also started to broadcast the embedded
advertisements which are displayed during the broadcasting of the
content and this definitely brings a new source of revenue to our
current platform.”
Jacky Lam, CME’s Chief Financial Officer stated, “CME generated
$29.9 million of cash from operating activities in the first nine
months of 2009. Our balance sheet remains very strong and as of
September 30, 2009, we had $40.9 million of cash with no debt.”
Mr. Cheng concluded, “Historically, our fourth quarter is
seasonally our best quarter. It appears that the 2009 fourth
quarter will be no exception.”
Institutional Investor Meetings
The management CME will hold meetings with current and
prospective institutional investors during the first week of
December. Accredited investors may request a meeting with
management by contacting: Lena Cati of The Equity Group at
212-836-9611 or lcati@equityny.com.
About CME
CME, through contractual arrangements with Fujian Fenzhong, an
entity majority owned by CME’S former majority shareholder,
operates the largest television advertising network on inter-city
express buses in China. While CME has no direct equity ownership in
Fujian Fenzhong, through the contractual agreements CME receives
the economic benefits of Fujian Fenzhong’s operations. Fujian
Fenzhong generates revenue by selling advertisements on its network
of television displays installed on over 20,000 express buses
originating in fourteen of China’s most prosperous regions,
including the five municipalities of Beijing, Shanghai, Guangzhou,
Tianjin and Chongqing and nine economically prosperous provinces,
namely Guangdong, Jiangsu, Fujian, Sichuan, Hebei, Anhui, Hubei,
Shandong and Shanxi which generate more than half of China’s
GDP.
Forward-Looking Statements
This press release includes “forward-looking statements” within
the meaning of Section 27A of the Securities Act of 1933 (the
“Securities Act”), as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Forward-looking statements include, but are not limited to
statements regarding expectations, hopes, beliefs, intentions or
strategies regarding the future. In addition, any statements that
refer to projections, forecasts or other characterizations of
future events or circumstances, including any underlying
assumptions, are forward-looking statements. The words
“anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,”
“intend,” “may,” “might,” “plan,” “possible,” “potential,”
“predict,” “project,” “should,” “would” and similar expressions may
identify forward-looking statements, but the absence of these words
does not mean that a statement is not forward-looking.
Forward-looking statements in this report may include, for example,
statements about:
- The Company’s goals and
strategies;
- The Company’s future prospects
and market acceptance of its advertising network;
- The Company’s future business
development, financial condition and results of operations;
- Projected changes in revenues,
costs, expense items, profits, earnings, and other estimated
financial information;
- The Company’s ability to manage
the growth of its existing advertising network on inter-city
express buses and expansion to prospective advertising network on
high speed railways;
- Trends and competition in the
out-of-home advertising media market in China;
- Changes in general economic and
business conditions in China; and
- Chinese laws, regulation and
policies, including those applicable to the advertising
industry.
HONG KONG MANDEFU HOLDING
LIMITED
CONSOLIDATED STATEMENTS OF
OPERATIONS AND OTHER COMPREHENSIVE INCOME
(Amounts in thousands of US
dollars, except for number of shares and per share data)
For the three months
endedSeptember 30,
For the nine months endedSeptember
30,
2009 2008 2009 2008 (unaudited) (unaudited)
(unaudited) (unaudited)
Sales, net of business tax
and related surcharges: $ 26,122 $ 15,783 $ 63,983 $ 46,233
Cost of sales:
(8,630
)
(6,459 )
(22,992
)
(18,359 )
Gross profit
17,492
9,324
40,991
27,874
Operating expenses: Selling expenses
(1,371
)
(313
)
(1,897
)
(823
)
General and administrative expenses
(588
)
(524
)
(1,941
)
(1,452
)
Total operating expenses
(1,959
)
(837
)
(3,838
)
(2,275
)
Operating income
15,533
8,487
37,153
25,599
Interest income
27
38
70
77
Income before income taxes
15,560
8,525
37,223
25,676
Income tax expenses
(3,896
)
(2,162
)
(9,823
)
(6,478
)
Net income
$
11,664
$
6,363
$
27,400
$
19,198
Foreign currency translation adjustment
$
11
$
539
$
(36
)
$
977
Comprehensive income $ 11,675 $ 6,902
$ 27,364 $ 20,175
Earnings per
share Basic and diluted $ 1,166.4 $ 636.3 $
2,740.0 $ 1,919.8
Weighted average number
of ordinary shares outstanding: Basic and diluted
10,000
10,000
10,000
10,000
HONG KONG MANDEFU HOLDING
LIMITED
CONSOLIDATED BALANCE SHEET
(Amounts in thousands of US
dollars)
September 30,2009
Dec. 31, 2008 (Unaudited)
ASSETS Current
assets: Cash and cash equivalents $ 40,855 $ 29,997 Accounts
receivable, net 11,293 6,065 Prepayment and other current assets
26 59
Total current assets 52,174
36,121
Non-current assets: Property, plant and
equipment, net 10,864 11,417 Deferred tax assets 1,910
1,578
Total non-current assets 12,774
12,995
Total assets $ 64,948 $ 49,116
LIABILITIES AND SHAREHOLDERS’ EQUITY Current
liabilities: Accounts payable $ 2,030 $ 1,565 Accrued expenses
and other current liabilities 3,045 1,301 Income tax payable 4,567
3,072 Amount due to a related party 1,508 798 Accrued liabilities
for the purchase of property, plant and equipment 1,455
1,072
Total current liabilities 12,605
7,808
Non-current liabilities: Accrued
severance payment 393 307 Deferred concession fees 7,145
6,005
Total non-current liabilities 7,538
6,312
Total liabilities 20,143
14,120
Commitments and contingencies
Shareholders’ equity: Ordinary shares $0.13 par value,
10,000 shares authorized and 10,000 shares issued and outstanding 1
1 Statutory reserves 4,314 4,314 Accumulated other comprehensive
income 1,348 1,384 Retained earnings 39,142 29,297
Total shareholders’ equity 44,805 34,996
Total liabilities and shareholders’ equity $ 64,948 $
49,116
HONG KONG MANDEFU HOLDING
LIMITED
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(Amounts in thousands of US
dollars)
For the nine months ended September 30, 2009 2008
(unaudited) (unaudited)
CASH FLOWS FROM (TO) OPERATING
ACTIVITIES Net income $ 27,400 $ 19,198 Adjustments to
reconcile net income to net cash provided by (used in) operating
activities: Depreciation of property, plant and equipment 2,351
2,324 Deferred tax benefits (332 ) (646 ) Changes in
operating assets and liabilities: (Increase) in accounts receivable
(5,228 ) (3,197 ) Decrease /(increase) in prepayments and other
current assets 33 (45 ) Increase in accounts payable 465 797
Increase in accrued expenses and other liabilities 1,744 436
Increase in deferred concession fees 1,140 2,266
(Decrease)/increase in accrued severance payment 86 318 Increase in
income tax payable 1,495 1,035 (Decrease)/increase in amounts due
to related parties 710 (2,396 ) Net
cash provided by operating activities 29,864
20,090
CASH FLOWS (TO) INVESTING ACTIVITIES
Acquisition of property, plant and equipment, net of related
payables (1,415 ) (4,591 ) Net cash used in
investing activities (1,415 ) (4,591 )
CASH FLOWS (TO) FINANCING ACTIVITIES Dividends paid
(17,555 ) - Net cash (used in)
financing activities (17,555 ) - Net
increase in cash and cash equivalents 10,894 15,499 Effect
of foreign currency translation adjustment on cash (36 ) 977
Cash and cash equivalents at the beginning of the period
29,997 6,364 Cash and cash equivalents
at the end of the period $ 40,855 $ 22,840
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