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Focus Media Holding Ltd. Message Board

  • real1614 real1614 Dec 19, 2008 8:28 AM Flag

    Google to buy Fmcn Allyes news

     
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    • I agree Hobo. I think management is smart enough to recognize the future years growth for Allyes and won't let it slip away cheaply. I was being conservative given the current environment. Allyes is VERY valuable and is a mojo growth opportunity. But, the only way FMCN could accelerate Allyes growth now would be to sell more shares to raise capital or to borrow or use cash (they have to maintain 10% of cash raised in their offerings by Chineese law) in order to start acquiring companies for Allyes mojo.
      So, hence their reason to issue the IPO intent and the reason to shop it around.
      Anyway, its all good. Nice to have GOOD news for a change. Watch out shorts!
      Still LONG 14,600 shares after TRADING 4500 shares for an 18% profit over the past several weeks.

    • Here is a simple earnings/valuations break down for fmcn, assuming they can sell Allyes for 600m, which I would still consider very cheap because it would be an accretive acquisition for goog at 10x earnings.

      Allyes sell: 600m
      cash on hand: 380m

      @ 10 per share, fmcn is trading at 1.3b, or about 300m enterprise value roughly. If you back out Allyes earnings for fmcn, and assume the roughly 1.70 in eps analyst use for 2008 and 2009, that puts fmcn's other businesses earning about 160m. So if you take 300m enterprise value, divide by 160m, that's less than 2x earnings. Now ask yourself this, do you think fmcn's earnings power has reached a saturation point. Perhaps a better question is, do you think China will grow further at some point in the future from current levels? If you compare China's ad market, and relate it to other countries in their development, China is in the first or second inning of the game, if you want to use a baseball analogy. Personally, I understand why fmcn wants to divest and restructure now, given the sentiment of the market, but in the longer run, Allyes is worth a hell of a lot more than 500-600m if that's what they end up selling it for. Look at what goog paid for dclk for example.

    • I think that the RUMOR helps tp prevent the price from going lower. If there is a sale for cash then most likely there would be a one-time payout to share owners and then the stock price would reflect that. ie cash dispersement of $4.50 per share and a new FMCN price of $5.00 per share. But that is pure speculation at this point. I'm afraid that the backdrop of a less than good economy makes any sale or IPO difficult near term.

      But, bottom line is there is more upside than downside risk right now which probably explains yesterdays gains in a down market.

 

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