China MediaExpress Holdings (NYSE AMEX:CCME)

GeoNuggets® - Quick Check List Highlighting Undiscovered Opportunities

Tm Entertainment & Media (AMEX:TMI)

Company Description: Tm Entertainment & Media is a blank-check company in the process of consummating a share exchange with China MediaExpress (CME). The proposed transaction still needs to be approved by Tm Entertainment shareholders. The closing of the transaction is anticipated to occur in the third quarter of 2009.

CME operates the largest television advertising network on inter-city express buses in China. CME generates revenue by selling advertisements on its network of television displays installed on express buses originating in nine of China’s regions, including the four municipalities of Beijing, Shanghai, Tianjin and Chongqing and five provinces, namely Guangdong, Jiangsu, Fujian, Sichuan and Hebei. See Report.

Keep in mind that there are no guarantees that the deal between Tm Entertainment and CME will happen. However, given the current available information and anticipated growth, the GeoTeam® was driven to code this stock as a GeoBargain® due to its favorable valuation, coupled with the Company's efforts to communicate its story by hiring an investor relations firm and attending road shows.

Data Ended 6/25/09

• Price = $7.74
• Implied/Proforma Trailing EPS = $0.81 ^a
• Target EPS based on incentive allocations = $1.28 (2009), $2.47 (2010), $3.19 (2011) ^a
• P/E based on Trailing EPS = 9.5 ^a

Reasons for Optimism. We generally do not code stocks as GeoBargains® before the closing of a share exchange transaction of this nature, but our confidence that investors will approve the transaction has been reinforced due to several factors.

1. TMI meets 8 out of 10 GeoBargain® Requirements
   
   

   	Requirement	Comments
   	Recent 52-week High (generally within 3 months)	Must Reach $7.85
   	30% EPS Growth Rate a	Full year 2009 Target implies a Proforma EPS growth rate of 58%
   	10% Revenue Growth	First Qtr. 2009 vs. 2008 revenue growth rate of 23%
   	Strong Balance Sheet	Yes
   	Positive Cash Flow	Yes, But Awaiting Future Filings For Specific Details
   	Debt to Equity Ratio less than 20%	No Long -Term Debt
   	Current Ratio is at least 2:1	3:1 as of First Quarter
   	Return on Equity is at least 15%	110% on Trailing Net Income
   	Minimum Pre-tax Operating Margins of 8%	56.1% as of 1st Qtr. 2009
   	Preferably Under 50 Million Shares	32.7 Million after closing of share exchange
   	High Insider Ownership (generally greater than 15%)	We Anticipate Will be >15% upon closing of share exchange
   	Limited Institutional Ownership (generally less than 20%)	TBA when information becomes available
   	P/E Divided by Growth Rate (PEG Ratio) is Less Than 1. a	0.16

   
   
2. Earlier this week, we outlined net revenue and EPS targets that CME must meet in order for CME shareholders to receive up to an additional 15 million incentive allocation shares. These targets, which imply exceptional growth, may add to investor confidence.
   
3. CME is currently the leader in China for adverting on television in inter-city express buses, a large and rapidly expanding industry. The Company has continuing agreements, ranging from five to eight years long, with 40 bus operating partners and works with well-known international brands such as Coca Cola (NYSE:KO), Pepsi, Siemens (NYSE:SI), Hitachi (NYSE:HIT), China Telecom (NYSE:CHA) and Toyota (NYSE:TM). CME's business model takes advantage of being able to offer flexible advertising packages to both advertising agencies and direct advertising customers. The Company's advertising network can be tracked to over 3000 highways in over 80% of the fastest growing cities in the world. *
   
4. As the out-of-home advertising industry in China continues to grow and become more a widely accepted method to reach the masses, CME is positioned to take advantage of the reputation it has built as the leader. Compared to the United States advertising per capita of ~586$, advertising spending per capita in China was a mere ~$12 in 2007. Out-of-home advertising is currently China's third largest advertising medium and is projected to grow 18% annually to over $5 billion in 2011. *
   
5. The company has experienced a compounded annual growth rate in net income of over 400% since 2006, enabled in part by healthy operating margins. Looking forward and utilizing its incentive financial targets, CME has attractive valuations that may make it a worthwhile long-term investment.*

* Source: Tm Entertainment & Media Report, filed with 8-K, Feb 22, 2009.  Other sources are highlighted in report.

Potential Valuation Scenarios if the company can achieve its EPS growth goals

Short-Term Potential value based on trailing Proforma EPS

P/E 20 * $0.81 = $16.2
P/E 25 * $0.81 = $20.3

Short-term Potential value based on 2009 Proforma EPS target

P/E 15 * $1.28 = $19.2

^a The company did not supply EPS data. The GeoTeam® calculated implied EPS figures using 32.7 million diluted shares for 2009 as the initial base amount and adding incentive shares in subsequent years assuming net income targets are met. We did this only as a frame of reference as the figures do not take into account the possibility of any future dilutive events. (After the closing of the share exchange, there will be approximately 28.9 million basic and 32.7 million fully diluted ordinary shares outstanding).

These scenarios are not intended to be investment advice, but are scenarios based on some commonly used investment guidelines. They are provided to aid investors in making their own investment decisions.