I just wanted to see if I could find any reason at all to sell.
CCME's numbers are too good to be true.
They did $57 million in revenues in Q3:10, and had...only $220k in G&A expense?
finance.yahoo.com
G&A has to include management salaries/expenses, office space, audit, Human Resources, and God knows what else. I know labor costs in China are low, but they only spent $220,000 in 3 months on these expenses, while delivering $57 million in revenues? Does everyone work from home on pre-pay cell phones and take $50k per year salaries?
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Also, how is it that CCME's gross margins are ~70%, while VISN's gross margins are ~18%? Their businesses are nearly identical. VISN pays for ad space, thus gross margins are low. How does CCME seem to get their ad space for 1/4th the cost?
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 and airport express buses in China.
VisionChina Media Inc. (Nasdaq:VISN - News) operates an out-of-home advertising network on mass transportation systems, including buses and subways.
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Here's the part that needs explanation:
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 and airport 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 24,400 express buses originating in eighteen of China’s most prosperous regions, including the four municipalities of Beijing, Shanghai, Tianjin and Chongqing and fourteen economically prosperous regions, namely Guangdong, Jiangsu, Jiangxi, Fujian, Sichuan, Hebei, Anhui, Hubei, Shandong, Shanxi, Inner Mongolia, Zhejiang, Hunan and Henan.
So Fujian F pays all the bills, and CCME realizes all the profits. That's why CCME's profitability is amazing, they recognize the profits of FF without paying any of the expenses. Why? |
