Notes
ChinaCast Education Corporation (CAST) provides e-learning and training services to educational institutions, government agencies, and corporate enterprises in the People's Republic of China (PRC). The company's Post Secondary Education Distance Learning Services division enables universities and other higher learning institutions to provide distance learning services. Its packages include the hardware, software, and broadband satellite network services, which allow university students located at remote classrooms around the country to interactively participate in live lectures broadcast from a main campus. This division serves 15 universities with approximately 128,000 students in 300 remote classrooms. The K-12 Educational Services division broadcasts multimedia educational content to approximately 6,500 primary, middle, and high schools in the PRC in partnership with educational content companies and educational institutions. Its educational content packages assist teachers in preparing and teaching course content. The Vocational/Career Training Services division, in partnership with various government departments and corporate enterprises, has deployed training centers in China to provide job-skills training to recent graduates, employees of state-owned enterprises, and corporate employees. The Daily English Language Training Centers division provides spoken English training to students, workers, and government/corporate customers. The company was founded in 1999 and is headquartered in Beijing, the People's Republic of China.http://cchyy.client.shareholder.com/
Auditor: Deloitte Touche Tohmatsu CPA Ltd.
2SEP08 - $3.96
Market Cap (intraday): 124.34MEnterprise Value (3-Sep-08): 79.59M
Trailing P/E (ttm, intraday): 11.68
Forward P/E (fye 31-Dec-09) : 8.43
PEG Ratio (5 yr expected): 0.30
Price/Sales (ttm): 3.56
Price/Book (mrq): 0.99
Enterprise Value/Revenue (ttm): 2.28
Enterprise Value/EBITDA (ttm): 7.248
Profit Margin (ttm): 27.44%
Operating Margin (ttm): 25.33%
Return on Assets (ttm): 3.46%
Return on Equity (ttm): 8.08%
The book value is less than 50% tangible (probably not signifcant for school).
Basic and diluted shares almost identical.
Current ratio: 1.4 ...the only weak point in the fundamentals.
From the last report...
"On April 11, 2008, Yu Pei Information Technology (Shanghai) Limited, the Company's subsidiary in the People's Republic of China (the "PRC"), consummated the acquisition of an 80% interest in Hai Lai Education Technology Limited ("Hai Lai") from Beijing Heng Tai Jufu Investment Limited. Hai Lai holds the entire interest in the Foreign Trade and Business College of Chongqing Normal University ("FTBC") and Hai Yuen Company Limited ("Heng Tai"). FTBC is a private college affiliated with Chongqing Normal University. The consideration for the acquisition was RMB480,000, of which RMB424,000 was paid and the remaining balance of RMB56,000 was agreed to be paid subsequent to June 2008....The Company believes that the acquisition furthers its strategy of expanding into the post-secondary bricks and mortar education market. The combination of these factors is the rationale for the excess of purchase price over the value of the assets acquired
and liabilities assumed.
* Net income for the quarter increased 83% year-over-year to RM25.7 million (US$3.7 million) from RMB14.1 million (US$2.0 million).
* Income from operations for the quarter increased 87% year-over-year to RM29.1 million (US$4.2 million) from RMB15.6 million (US$2.3 million).
Revenue growth is irrelevant, as the company attributes it entirely to an acquisition.
CAST is a way to bet on the Renmonbi (yuan): " We conduct substantially all of our operations through our PRC operating companies, and their financial performance and position are measured in terms of Renminbi. The majority of our net sales and purchases are denominated in Renminbi....Any devaluation of the Renminbi against the U.S. dollar would consequently have an adverse effect on our financial performance and asset values when measured in terms of U.S. dollars. In addition, from time to time we may have U.S. dollar denominated fixed deposits, and therefore a decoupling of the Renminbi may affect our financial performance in the future....We recognized a foreign exchange loss of approximately RMB0.2 million (US$0.02 million) RMB0.7 million (US$0.1 million) for the three and six months ended June 30, 2008. We do not currently engage in hedging activities, as such, we may in the future experience economic loss as a result of any foreign currency exchange rate fluctuations.
Hm, how did they incur a foreign exchange loss, when the yuan appreciated against the dollar?
Darn good fundamentals, and a business that intuitively seems promising.
22NOV08 - $2.04
October 7: "ChinaCast Education Corporation...today announced that its Chairman and Chief Executive Officer, Ron Chan, will increase his ownership of the company through the purchase of $500,000 of common stock in the open market in accordance with guidelines specified by Rule 10b5-1 under the Securities Exchange Act of 1934."On SEP 26 the company "...priced an offering to sell 4,250,000 shares of its common stock at a public offering price of $2.60 per share. " There were 32 million shares outstanding before, so this is 13% dilution.
SEP 30, 2008
* Operating income increased by 59% year-over-year
* As at September 30, 2008, ChinaCast had cash, cash equivalents and term deposits of RMB496.9 million (US$73.0 million).
* Cash Flow from Operations. Cash flow from operations for the third quarter was RMB96.7 million (US$14.2 million), a 203% increase year-over-year.
The ratio of current assets to liabilities (current ratio) is still a bit low. The share offering should fix that, until they spend it.
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