China Mediaexpress Holdin (NASDAQ:CCME)

	Recent 52-week high
	30% Earnings Per Share (EPS) growth rate
	10% revenue growth year over year
	Strong balance sheet
	15% minimum return on equity (ROE)
	8% minimum pre-tax margins
	Under 50 million shares outstanding
	High insider ownership
	Limited institutional ownership
	P/E at least 1/2 of EPS growth rate

Given the current market environment, The GeoTeam would like to put CCME expectations into perspective.

Normally, we would remove CCME from the GeoBargain list

Based on 2010 guidance, the 2nd Q should be a strong quarter, however dilution will likely impact 2010 3Q and 4Q resulting in EPS growth of less than 30%:

If we take the high end of CCME's guidance of $75.0 million and subtract the first quarter reported net income of $18.1 million, it will report net income of $56.9 million for the remaining 2010 nine months.  This works out to about $19.0 million per quarter or EPS of $0.57.

In 2009 we calculated that CCME reported EPS of:

• $0.40 for its June second quarter. (2010 implied EPS growth= 42.5%)
• $0.56 for its September third quarter. (2010 EPS implied growth= 1.8%)
• $0.49 for its December Fourth quarter. (2010 EPS implied growth= 16.3%)

We are not sure how investors will react to such events.  Short-term investors may choose to revisit CCME as it enters 2011 when, according to the 2011 net income target of $130 million, consistent EPS growth should resume. (2011 EPS could reach $3.88 based on current shares. This compares to about $2.25 for 2010 if objectives are met).

**Please be aware that the the 2010 net income guidance is below the incentive allocation target of $83.5 million. Investors should take this discrepancy into account if they choose to reference the 2011 net income target when formulating an investment decision. Also, if allocation targets are met, the fully diluted share count will rise.

**CCME also was adamant about not providing a 2010 EPS target during its 2010 earnings call.

The good news for dedicated long-term investors is that:

• CCME guidance does not include acquisitions or additional advertising agreements with buses. As it currently stands, CCME has increased its "bus exposure" by 8.3 % (1751 additional busses) since it issued its guidance.
  
• Per the 2010 first quarter conference call, CCME is evaluating potential acquisition opportunities. (We got the impression that such an event could be imminent).
  
• Per the 2010 first quarter conference call, CCME confirmed that its guidance is very conservative.
  
• It appears that management is portraying a strong message that it will not have to dilute its shares anytime soon:

"CME believes that its existing cash resources, the anticipated cash flows from operating activities, will be sufficient to meet both its short-term and long-term liquidity needs, including capital expenditure requirements to achieve its expansion plans and the potential increase in costs as a result of becoming a public reporting company."

We will make an exception and keep CCME coded as a GeoBargain for long-term investors who are aware of some of the possible short-term "perception" hurdles.