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China Education Alliance Inc. Message Board

  • hrjohn27 hrjohn27 Mar 7, 2011 12:54 PM Flag

    CEU signs agreement with N.I.T

    You would think that would increase their credibility. Jump in volume,not much in price.

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    • Whatever CEU's real motive in this deal, its either for deception, theft or trying to pretend they are a real company now lol.

      If CEU was commanding the type of revenues and profit they claimed for 5 years, this aquisition and its terms would be unessecary.

      This smells to high heaven.

      My guess is they are taking over NIT's school(s) and claiming they were the schools they ran since 2005 during their fake revenues and profits.

      Either that or they are suiciding the shareholder money in a conflict of interest.

      Either way, nothing about CEU is honest or moral.

      This company exists to fleece shareholders, nothing more.

      Hence, this aquisition must aid that in some manner, through deception or theft.

    • get real, $50mil RMB = like $6-$7mil US dollars.

      they are proving they are transfering to someone else, the only part we knew was real, the 2009 offering monies of $20mil.

      Besides, nobody has ever said CEU didnt have the $20mil offering monies from a year or two ago, or some of it.

      What people have clearly said is that 95% of CEU's business is likely FAKE, alongside 80 or 90% of their alleged cash.

      Not only that, NIT is a "vocational" school, which spells red flags all over.

      With the SEC contacting them probably a month ago, fraud claims rampant, CFO jumping ship..

      One must ask themselves why they chose to "Transfer" $7-$14mil US dollars to NIT.. does the CEO's brother own it? Are they liars and really just briefcasing the money up, instead of running the schools like their empty fake school they had in Harbin??

      Lets be real here and stop with this childish BS.

    • They are getting a great deal. See, they have minimal or no costs to managing (supervising) a training center. They get management fees that are 20% return over their investment for 10 years. So they get 2.5 times their investment in 10 years (10 a year plus the principal back at year 10). All costs related to the actual operation are charged to the operation itself and any excess cash goes to NIT. All CEU does is basically supervise the training center and get a 20% yeild for doing so.

      Its identical as owning a hotel and signing a managemnt contract with Marriott to manage the property. You as the owner have all the revenues and expenses at the hotel. Any cash is yours. Marriott simply earns a clean management fee for selecting a general manager and supervising the hotel (as well as giving the brand, the Marriott Rewards programs, etc...). But Marriott does not have a direct cost related to the operation.

      The beauty of the CEU deal is that they are transfering bank cash (and proving it is real) to earnings at a 20% clip. Earnings and cash flow help determine stock price more than cash in the bank. So is one clean swoop they are proving cash and increasing earnings..

    • If they can sign up 5 more Universities with loans like this, I would say that they end up establishing a huge cash flow. Basically $1 million will go to their bottom line per quarter from just the fees. If they make another $200K, we will get 10 cents per quarter. Over 4 quarters it will be 40 cents. This will get the share price moving.
      I am not sure why they have not invested this money in their training centers, given that the payback was higher per their 10-K and 8-Ks of the past.
      If they plan to sell to their captive audience, they surely did not explain it well in their PR. In fact, the PR is very weak.

    • Yup, it is actually worse than I thought. They will basically make 10% margin on their investment. There is a value of time they will spend managing the training center. Take away the OH for admin, they will not have much left. I bet that they will show a huge OH and minimize the profit.

    • It only works as a strategic move. It is not all that financially beneficial to CEU on the management fee alone.

      Basically, CEU is buying a customer relationship through its loan to NIT with the intentions of selling their materials through a new captive audience.

    • Don't confuse a management fee with interest expense. Read the 8-K. You will see that the yearly RMB 10M is a management fee not interest expense. To protect their management fee, CEU has stated that it will charge a 20% interest on the loan but will WAIVE the interest if the management fees are paid on time. In other words, NIT has a 0 interest loan for 10 years and they must simply pay the principal (RMB 50M) at the end of 10 years. In exchange, they will pay CEU MANAGENT fees of RMB 10M per year to basically manage the training center.

    • 1) Private university is difficult to get loan from banks. From other sources, like private funding, the interest rate could be higher.

      2) CEU can provide management for the vacation training. CEU can get paid back by sell online education materials. Also get 10M Yuan each year.

    • does seem too good to be true so i'm sure the shorts will just paint it as a deeper fraud. The only way this stock escapes from its current funk is a hong kong dual listing. They could execute on the buyback, add some insider shares and open a new HK listing. Then watch the sparks fly as Arbitrage takes over. A stronger stock price would be hugely beneficial to the insiders if they want to sell some shares even if don't give a crap about US investors. I'm not sure why this is not being done in large scale right now with the hedge fund cronies trying to shake down shares in these RTO stocks.

    • This is a great deal for CEU that gives them a good return and proves they have cash. The way management contracts work is that the management company (in this case CEU) earns management fees but not the profits from the endeavor. In this particular case, CEU will loan RMB 50 million and earn RMB 10 million a year. So they get a 20% annual return for 10 years AND get their principal back after 10 years. Its identical to a bond yielding 20%....great deal. They do not share in the profits of the training center but rather get a 20% annual yield of their investment.

      I do agree however, that they need to buy back more and more shares. The amount of share buyback will be a really important message to the market once the 10K is filed.

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