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CCME Analyst Report

CCME Analyst Report

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March 12, 2010 POST SPAC SPECIAL SITUATION

China MediaExpress (CCME)
CCME – Sustainable growth from a well defended niche
Key investment points • Intriguing business: Growth driven by network expansion from 20,000+ buses in 2009 to 30,000 buses by the end of 2010. Advertisers are attracted to CCME’s large scale (100+ million monthly viewers) and low CPM rates. CCME’s CPM rates should not suffer competitive pricing pressures due to its well protected niche, leading 32% market share and large discount to its peers. Excellent cash generation with low DSO. Growth, profit margins and cash conversion superior to all China out-of-home advertising public peers. Compelling valuation: Despite these positives, CCME trades at a 69%+ discount to its direct public peers. Credibility no longer an issue: The primary issue holding back a higher multiple has been credibility after a tough SPAC IPO that raised little cash. The recent Starr International preferred investment is validation that CCME’s business is sound. Starr spent four months of due diligence before making the decision to invest $30M. Additional actions to build credibility have been the hiring of Deloitte and Touche auditors, repurchase of $1M public warrants and active communication with public investors.
Key data Current Price (USD) 11.56 Short term target 20.00 12 month target 28.00 Market cap ($ mn) 457 F.d. enterprise value (EV) 336 F.d. shares outstanding (mn) 39.6 Public float 10.1 Dec 31 YE 2008 2009 2010 2011 Revenue 63 95 143 191 EBITDA 38 58 77 95 Adj net income 27 41 54 66 EPS basic 0.97 1.43 1.64 2.00 EPS f.d. 0.78 1.16 1.36 1.66 F.d. P/E EV/EBITDA 14.8 10.0 7.5 4.9 8.5 4.4 7.0 3.6 23 50

EBITDA growth % 201 EBITDA margin % 60
Med. Comp. Multiples

P/E EV/EBITDA

53 32 61 54 2009 2010 21.6 37.7 13.3 11.2

Valuation Our short term target is $20.00 which is 14.7x FY10F P/E (12.4x P/E ex-net cash) and 8.7x 2010 EV/EBITDA. Our 12 month target is $28.00 which is 10.4x 2011 EV/EBITDA which is in line with typical out-of-home advertiser forward multiples. Our 12 month target is crossed validated with our DCF model that generates a $28.23 valuation. Our forecast is conservative with net income below the minimum net income targets set by the Starr investment th agreement. For the 4 quarter 2009 we forecast $13.2M net income for true fully diluted EPS of $0.38. To meet the Starr th 2009 net income target, 4 quarter net income will need to be $14.7M which would generate fully diluted EPS of $0.42.

China MediaExpress (CME) Description: Since its inception in November 2003, CME has grown rapidly to become China’s largest television advertising operator on inter-city express buses. The Company generates revenue by selling advertisements on its network of television displays installed on over 21,000 express buses originating in fourteen of China’s most prosperous regions, including the five municipalities of Beijing, Shanghai, Guangzhou, Tianjin and Chongqing and nine economically prosperous provinces, namely Guangdong, Jiangsu, Fujian, Sichuan, Hebei, Anhui, Hubei, Shandong and Shanxi which generate more than half of China’s GDP.

Bottom line: CCME’s well defended niche and cash rich balance sheet ($100M net cash) support a sustainable and th high growth outlook for its business. We expect the release of strong 4 quarter audited results and positive guidance for 2010 to be the catalyst to move the shares towards our short term target of $20.00. Neil Danics (858) 366-4580 MBA, CMA ndanics@spacanalytics.com SPAC Analytics Special Situation Research

March 12, 2010

China MediaExpress (CCME)

Summary Income Statement (mn USD):
2009 Q2 Q3 19.1 7.2 11.9 0.3 0.5 0.8 11.1 0.0 11.1 2.8 8.3 0.0 8.3 26.1 8.6 17.5 1.4 0.6 2.0 15.5 0.0 15.5 3.9 11.6 0.0 11.6 Annual Forecast SA Starr CCME 95.1 33.2 61.8 3.8 3.2 7.0 54.9 0.1 54.9 14.3 40.6 0.1 40.5 42.0 104.2 2010F Q2 Q3 33.5 12.1 21.5 2.9 1.1 4.0 17.4 0.0 17.4 4.4 13.1 0.0 13.1 36.3 13.4 22.9 3.5 1.2 4.7 18.2 0.0 18.2 4.6 13.7 0.0 13.7 Annual Forecast SA Starr CCME 142.7 51.6 91.1 13.9 5.4 19.3 71.8 0.0 71.8 18.0 53.9 0.0 53.9 55.0 196.6 2011F SA Starr CCME 191.0 74.5 116.5 20.6 8.2 28.8 87.7 0.0 87.7 21.9 65.8 0.0 65.8 70.0 305.5

2007 Sales, net Cost of sales Gross profit Selling expenses G&A Total operating exp. Operating income Interest income Income before taxes Income tax Net income Foreign cur. Trans. Net Income Key metrics: EPS - f.d. P/E D&A EBITDA EV/EBITDA # of buses EOP Quarterly rev. per bus Annual growth Revenue growth EBITDA growth Gross margin Selling exp % of sales Opex % of sales EBITDA margin Tax rate 25.8 13.2 12.7 0.9 0.7 1.7 11.0 0.0 11.0 4.1 7.0 0.4 7.3

2008 63.0 25.1 37.9 1.1 1.7 2.8 35.1 0.1 35.2 8.9 26.4 1.0 27.4

Q1 18.8 7.1 11.6 0.3 0.8 1.1 10.5 0.0 10.6 3.1 7.5 0.1 7.4

Q4F 31.1 10.3 20.8 1.9 1.2 3.1 17.8 0.0 17.7 4.4 13.3 0.0 13.2

Q1 31.7 10.4 21.2 2.3 1.3 3.6 17.6 0.0 17.6 4.4 13.2 0.0 13.2

Q4 41.1 15.6 25.5 5.1 1.8 6.9 18.6 0.0 18.6 4.6 13.9 0.0 13.9

71.5

140.9

219.5

60.2

119.4

186.1

42.1

83.6

130.3

0.21 55.3 1.6 12.6 22.4

0.78 14.8 2.9 38.0 7.5

0.21

0.24

0.33

0.38

1.16 1.20 10.0 3.4 58.2 4.9

1.17

0.33

0.33

0.35

0.35

1.36 1.39 8.5 5.2 77.0 4.4

1.76

1.66 1.77 7.0 6.9 94.6 3.6

2.39

0.8 11.3

0.8 11.9

0.8 16.3

1.0 18.8

65.5 4.5

1.0 18.6

1.2 18.6

1.4 19.6

1.6 20.2

128.5 3.3

197.8 2.6

10,053 15,260 16,000 16,000 18,000 20,000 20,000 1,156 1,244 1,201 1,193 1,535 1,637 1,348 29% 8% 8% 540% 276% 548% 269% 49% 60% 4% 2% 6% 4% 49% 60% 37% 25% 24% 23% 62% 1% 6% 60% 29% 24% 28% 62% 1% 4% 62% 25% 65% 75% 67% 5% 8% 63% 25% 86% 82% 67% 6% 10% 60% 25% 51% 53% 65% 4% 7% 61% 26% 65% 72% 69%

21,000 24,000 26,000 28,000 28,000 1,545 1,491 1,453 1,523 1,486 10% 69% 65% 67% 7% 11% 59% 25% 76% 57% 64% 9% 12% 56% 25% 39% 20% 63% 10% 13% 54% 25% 32% 7% 62% 13% 17% 49% 25% 50% 32% 64% 10% 14% 54% 25%

30,000 33,000 1,638 1,565 5% 34% 23% 61% 11% 15% 50% 25%

72%

72%

63%

65%

65%

Pro forma share count / EV Basic 32.9 Starr International - pref/common Earn out shares Starr International - warrants SPAC mgmt. warrants 2.1 F.d. shares 35.0 Market capitalization 405 Net debt / (cash) -121 Enterprise value (EV) 284

32.9

32.9

32.9

32.9

32.9

32.9 32.9

32.9 1.0

32.9 3.0 1.5 2.1 39.6 457 -121 336

32.9 3.0 1.5 2.1 39.6 457 -121 336

32.9 3.0 1.5 2.1 39.6 457 -121 336

32.9 3.0 1.5 2.1 39.6 457 -121 336

32.9 32.9 3.0 3.0 1.5 1.5 2.1 2.1 39.6 39.6 457 457 -121 -121 336 336

2.1 35.0 405 -121 284

2.1 35.0 405 -121 284

2.1 35.0 405 -121 284

2.1 35.0 405 -121 284

2.1 35.0 405 -121 284

2.1 2.1 35.0 35.0 405 405 -121 -121 284 284

2.1 36.0 416 -121 295

32.9 3.0 8.0 1.5 2.1 47.6 550 -121 429

32.9 32.9 3.0 3.0 1.5 1.5 2.1 2.1 39.6 39.6 457 457 -121 -121 336 336

32.9 3.0 15.0 1.5 2.1 54.6 631 -121 510

Assumptions / Notes: Assumes no new acquisitions are made with $77M cash raised in Jan 2010. Gross margins decline in 2010 and 2011 reflecting higher concession fees to bus operators offset by some degree by a greater % of direct advertising clients. Selling expense as % of revenues increases by 6% in 2010 reflecting much larger direct sales force in 2010. No change to RMB exchange rate in 2010 or 2011. Net debt / (cash) includes cash from warrants redemption, net cash from the Starr Jan 2010 $30M financing, and estimated Dec 31, 2009 company net cash balance. SA refers to SPAC Analytics forecast. Starr refers to minimum net income targets per recent $30M Starr International preferred financing. CCME refers to the share based net income earn out targets per the SPAC merger transaction. Fully diluted EPS assumes all warrants and convertible preferred securities are converted into common shares.

SPAC Analytics Special Situation Research

2

March 12, 2010

China MediaExpress (CCME)

CCME should avoid pricing & margin pressure due to its dominate share and unique cooperation agreement with the Chinese government
CCME controls over 32% of the China inter-city express bus television advertising market and by the end of 2010 CCME should control over 45% of the market. At the end of 2009 CCME had 20,000+ buses on its network, with 41,000+ television displays and a monthly audience of over 100 million people. Management expects to grow CCME’s network to over 30,000 buses by the end of this year. The estimated total market is 65,000+ buses with 27+ passengers. CCME’s large network is highly attractive to advertisers who want to work with a supplier who has nd rd substantial scale to provide access to China’s growing middle class in high growth 2 and 3 tier cities. A key factor in CCME’s success is a five year cooperation agreement it signed with the Transport Television and Audio-Video Center, an entity affiliated with the Ministry of Transport of the People’s Republic of China. The agreement designates CCME as the sole strategic alliance partner in the establishment of a nationwide in-vehicle television system on buses traveling on highways in China. The agreement gives CCME preferential status as the only authorized inter-city bus advertising company by the government and serves as a strong tool to sign new bus operators to CCME’s network and to deter new competitors from entering the inter-city bus advertising market. The cooperation agreement expires in October 2012. In the unlikely case the agreement is not renewed it would obviously be a negative development but not a disaster. The majority of CCME’s 47 bus operators have signed five to eight year contracts in the past year and several new bus operators are expected to be signed to long term contracts between now and the end of 2012. Effectively with this cooperation agreement CCME has at minimum a 2.5 year window to further increase its market share of the inter-city bus market with little competition. This reduces the pressure on CCME to pay high concession fees to bus operators and/or reduce its CPM rates to keep business. Thus, CCME’s business has a substantial advantage to several other China out-of-home advertising companies whose verticals have competition which has led to margin pressures over the past year.

The quality of CCME’s advertising channel is high
CCME’s audience is highly captive since the average passenger typically sits on an express bus for over two hours. Passengers are able to view the television screens unobstructed unlike crowded intra-city buses and subways where line of sight can be impeded and the attention span is limited due to short trips. The programming provided from Fujian SouthEastern Television Channel and Hunan Satellite Television is considered entertaining and high quality. CCME displays advertisements in ten-minute blocks after every 30 minutes of entertainment content, so audiences can potentially view the same advertisement up to three times per average journey. This repeated exposure to the same advertisement should increase its effectiveness. CTR Market research found that 81% of all passengers said they had watched the television displays on CCME’s network and almost 80% said they regularly watched the displays on the network. CCME’s demographic is attractive despite some competitors criticizing the profile of an inter-city bus passenger. They believe that passengers on inter-city buses have low income and are under educated. While inter-city passengers are not as attractive as a pure urban demographic, the express bus market demographic is still attractive with incomes above the China average. According to surveys conducted by the CTR Market Research in July 2008, the audience of CCME’s network had the following overall characteristics: • • • • the average household income is over RMB 5,800 per month and the average individual income is over RMB 3,300 per month over 50% of the target audiences have received a diploma, college degree or higher education over 40% of the target audiences are professionals, managers, executives and business owners over 40% of the target audiences are frequent travelers that take inter-city express buses for more than once a month

SPAC Analytics Special Situation Research

3

March 12, 2010

China MediaExpress (CCME)

CCME’s advertising rates are substantially lower than intra-city buses and local television
The cost per thousand (CPM) rates that CCME charges is just 13% of equivalent intra-city bus and 2% of local television rates despite CCME’s large network and positive attributes. CCME’s large discount to these alternative mediums provides flexibility to raise rates with no decline in demand for its inventory which is currently experiencing close to 100% utilization.
CCME VISN Inter-City Bus Intra-City Bus (In RMB for every 15 seconds)
City

Local Television

CME CPM % of Intra-City Bus Local TV

Shanghai Guangzhou Xiamen Fuzhou Nanjing Changzhou Tianjin Beijing Average

4 3 3 3 3 3 3 2 3

17

30

26 21

140 114 255 268 153 317 59 133 180

#REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! 13%

2.6% 2.8% 1.2% 1.0% 1.7% 0.8% 4.3% 1.6% 2%

Source: CCME proxy, VisionChina Median (NASD: VISN) investor presentation (note VISN average composed of several cities not on this list)

New embedded advertising and other factors should drive strong 2010 growth
In the third quarter of 2009 CCME launched a new embedded advertising initiative that was the driver of a large portion of the sequential growth in the quarter. Embedded advertising allows advertisers to be the exclusive sponsor of a specific program in return for paying a higher CPM to CCME. The advertisers gain additional exposure from announcements that the program is sponsored by that advertiser and a banner add is placed on the side of the screen displaying the logo of the advertiser during the broadcast of the programs. Additional drivers of growth in 2010 are expected to come from: 1. Advertising rate increase of 10%: Raising rates by 10% is reasonable considering CCME’s low CPM rates and expectations for a strong advertising market as evidenced by: o The strong November CCTV 2010 advertising auctions o Reports that VISN and Focus Media (NASD: FMCN) have raised their rates by 10% to 20% in January o Changes in government regulations that reduce television advertising time which has caused local television stations to increase their rates by 20% to 30% to make up for their lost inventory 2. Substantial increase in advertising inventory: Management’s goal is to increase the number of buses to 30,000 by the end of 2010 for a 50% year over year increase. This appears reasonable given the rate of new bus growth since June of 2009. For conservatism we assume 28,000 buses by the end of 2010 in our model. 3. New acquisitions: $77M of capital was raised in the last two weeks of January from the Starr International preferred investment and the SPAC public warrant redemption. Management expects to deploy CCME’s excess cash of $100M+ towards acquisitions in the near future. For conservatism we do not include the contributions from acquisitions in our financial model.

SPAC Analytics Special Situation Research

4

March 12, 2010

China MediaExpress (CCME)

Validation by Starr International and Deloitte and Touche is significant and should lead to multiple expansion
CCME had a tough SPAC IPO in October 2009 that raised no cash. The difficulties they had coming public raised questions about the quality of its business. The recently completed $30 million preferred financing by Starr International reduces these concerns since Starr conducted due diligence that most investors are not able to do. Before committing to invest $30 million in CCME, Starr conducted a four month due diligence of CCME that involved several third party cross checks of CCME’s operations including an independent audit of the financials and verification of CCME’s commercial contracts. Starr International is a private equity firm that is chaired by Hank Greenburg, the former CEO of AIG. On average, Starr has invested $100M in three to four companies per year in China. We expect a further boost to credibility when CCME reports its 2009 results audited by newly hired Deloitte and Touche.

Financial analysis
Our model is conservative with net income below the minimum targets set by the Starr investment agreement and the performance share earn outs. Our forecast for 2010 and 2011 assumes 5% to 10% rate increases and a decrease in CCME’s profit margins as we expect CCME to increase its SG&A expenses and increase the concession fees it pays to the bus operators on its network.

2007A SPAC Analytics Forecast Revenue (mn USD) EBITDA Net income Fully diluted EPS Gross profit margin Sales expense % of revenue EBITDA margin # of buses Avg. quarterly revenue per bus Annual growth Capex (mn USD) Starr Minimum Net Income Targets Net income (mn USD) Fully diluted EPS Earn Out Share Guidance Revenue (mn USD) EBITDA Net income Fully diluted EPS Earn out shares to be issued (mn) 25.8 12.6 7.0 0.21 49% 4% 49% 10,053 1,156 29% 6.6

2008A 63.0 38.0 26.4 0.78 60% 2% 60% 15,260 1,244 8% 4.2

2009F 95.1 58.2 40.5 1.16 65% 4% 61% 20,000 1,348 8% 6.0

2010F 142.7 77.0 53.9 1.36 64% 10% 54% 28,000 1,486 10% 28.7

2011F 191.0 94.6 65.8 1.66 61% 11% 50% 33,000 1,565 5% 10.0

42.0 1.20

55.0 1.39

70.0 1.77

104.2 65.5 42.1 1.17 1.0

196.6 128.5 83.6 1.76 7.0

305.5 197.8 130.3 2.39 7.0

We assume a large capital outlay in 2010 as management expands the network by 10,000 buses and retrofits the existing buses and stations network to an automated process from a manual process. We estimate the cost of this program to be $28.7 million ($1,000 per new bus + $100 retro fit of existing buses + $150K per new station) which can be funded from the current estimated net cash balance of $100M as well as cash flow from operations.

SPAC Analytics Special Situation Research

5

March 12, 2010

China MediaExpress (CCME)

There is upside to our 2010 forecast if accretive acquisitions are made and if operations perform better than we have conservatively modeled. We believe that $60M+ net income (f.d. EPS of $1.52+) is probable for 2010 based on current growth rates and margins and the high likelihood of accretive acquisitions in the next few months. However, for conservatism we maintain our forecast until we gain better clarity on these events occurring. CCME has excellent cash conversion In a country and an industry notorious for long outstanding receivables, CCME is a stand out with very fast cash conversion. CCME obtains fast 30 day payment terms from its advertising agency clients in return for providing its inventory at much lower CPMs than equivalent television. CCME has a limited number of advertising agency clients that make up the majority of its revenue which makes it easier to manage its receivables. In 2008, its top 20 advertising agencies accounted for 98% of its revenue. CCME plans to increase the proportion of direct advertising clients to 40% of revenues in 2010 in order to boost profit margins. By the end of 2010 CCME expects to increase the size of its sales force sales to 300+ from 90 headcount at the end of 2009. We expect CCME’s collection times to decrease as the percentage of revenue from direct advertising clients increases. DSO comparison: Out-of-home advertisers
Outdoor advertising channels CCME Buses inter-city FMCN VISN AMCN LAMR Elevators Intra-city buses Airports Billboards LED billboards Subways Gas stations Bus shelters LED displays in store and office 30-Sep-09 31-Dec-09 31-Dec-09 31-Dec-09 222 37 49 143 498 121 149 1056 122 112 121 49 DEC FP Billboards Street furniture Airports 31-Dec-09 601 1919 114 CCO Billboards Airports Malls Taxis 30-Sep-09 738 1935 104

2009 Days receivables Period A/R Revenue Days receivables

30-Sep-09 15 95 43

Source: company filings

The only peer that has similar DSO’s is Lamar Advertising (NASD: LAMR).

SPAC Analytics Special Situation Research

6

March 12, 2010

China MediaExpress (CCME)

DCF valuation of $28.23 Our DCF estimate of $28.23 is based on a 2.5% terminal growth rate and a 15.0% WACC which is derived from a blended peer average beta of 1.30, equity risk premium of 6.0% and a risk free rate of 5.56%. The $28.23 valuation supports our $28.00 12 month target which is 15.0x FY11F ex-net cash P/E and 10.4x 2011 EV/EBITDA which are in line with the typical one year forward multiples of China and Western out-of-home advertisers.
Discounted Cash Flow (2010 - 2018)
Dec-08 Revenue Net change Revenue growth EBITDA margin EBITDA Less: D&A EBIT Unlevered Taxes After Tax Earnings Add back: D&A Less: Capex Free cash flow Terminal Growth Discount Rate DCF Sum of PV Terminal Value Enterprise Value Net Debt / (Cash) Equity Value - fully diluted Share price target - true fully diluted WACC Cost of debt Cost of equity Debt/equity 15.0% 12.0% 15.0% 0.0% 2.5% 13.0% 411.3 805.1 1,216.5 (121.0) 1,337.5 33.81 14.0% 394.4 703.4 1,097.9 (121.0) 1,218.9 30.82 15.0% 378.0 617.4 995.5 (121.0) 1,116.5 28.23 16.0% 363.4 549.3 912.7 (121.0) 1,033.7 26.13 17.0% 349.2 490.0 839.1 (121.0) 960.2 24.27 63.0 37.2 143.8% 60.3% 38.0 (2.9) 35.1 (8.9) 26.3 2.9 (4.2) 24.9 Dec-09 95.1 32.1 50.9% 61.2% 58.2 (3.4) 54.9 (14.3) 40.6 3.4 (6.0) 38.0 Dec-10 142.7 47.6 50.1% 54.0% 77.0 (5.2) 71.8 (18.0) 53.9 5.2 (28.7) 30.3 Dec-11 191.0 48.3 33.9% 49.5% 94.6 (6.9) 87.7 (21.9) 65.8 6.9 (10.0) 62.7 Dec-12 236.8 45.8 24.0% 48.0% 113.7 (8.9) 104.8 (26.2) 78.6 8.9 (10.0) 77.5 Dec-13 281.8 45.0 19.0% 47.0% 132.5 (10.9) 121.6 (30.4) 91.2 10.9 (10.0) 92.1 Dec-14 326.9 45.1 16.0% 46.0% 150.4 (12.9) 137.5 (34.4) 103.1 12.9 (10.0) 106.0 Dec-15 372.7 45.8 14.0% 45.0% 167.7 (14.9) 152.8 (38.2) 114.6 14.9 (10.0) 119.5 Dec-16 417.4 44.7 12.0% 44.0% 183.7 (16.9) 166.8 (41.7) 125.1 16.9 (10.0) 132.0 Dec-17 463.3 45.9 11.0% 43.0% 199.2 (18.9) 180.3 (45.1) 135.2 18.9 (10.0) 144.1 Dec-18 509.6 46.3 10.0% 42.0% 214.0 (20.9) 193.1 (48.3) 144.9 20.9 (10.0) 155.8

25.0%

Risk free rate Equity risk premium Beta

5.56% 30 year t-bill + 1% 6.0% 1.30 Average of FMCN, VISN and AMCN

SPAC Analytics Special Situation Research

7

March 12, 2010

China MediaExpress (CCME)

Comparable analysis – CCME is much cheaper than its peers
Price Chinese Out-of-Home Advertisers VISN - VisinChina Media 4.77 AMCN - AirMedia 7.18 IDI - SearchMedia 5.52 FMCN - Focus Media 16.43 Average Median Western Out-of-Home Advertisers LAMR - Lamar 34.32 CCO - Clear Channel 11.85 DEC FP - JC Decaux 19.42 Average Median All Out-of-Home Advertisers Average Median
CCME - C hina MediaExpress

Adj EV* 442 373 114 1,741

EBITDA EV/EBITDA EBITDA Margin 2009 2010 2009 2010 2009 2010 32 -21 33 17 16 13.8 21 37 3.4 170 101.2 39.5 13.8 464 618 445 12.9 12.3 14.2 13.1 12.9 26.3 13.3 28.3 17.8 3.0 10.3 14.9 14.1 12.3 10.5 11.2 11.3 11.2 13.3 11.2 4.4 -69% 26% 37% 3% 22% 26% 42% 20% 18% 27% 20% 24% 23% 61% 10% 9% 38% 28% 21% 19% 42% 22% 21% 29% 22% 24% 22% 54%

F.D PE 2009 2010 10.9 10.0 32.3 17.7 10.9 207.4 87.6 7.7 20.5 80.8 54.0

5,709 6,479 4,960

443 529 349

104.4

37.7

39.4 21.6 10.0

72.2 37.7 8.5 -84%

11.56

336

58

77

5.8

% discount to median

* Adj EV includes future estimated cash and stock commitments for acquisitions.

Source: Bloomberg and SA Estimates

CCME trades at a substantial 69%+ discount to its China and Western peers on an EV/EBITDA and PE basis. FMCN is the best Chinese comparable since its operations are the most stable. VISN and IDI are currently working through operational issues while AMCN’s high 2010 multiple is in anticipation of a much stronger 2011. A key point of differentiation is that CCME does not have any acquisition related earnout payment commitments. This eliminates the risk of a drop in revenues after the earnout period expires as occurred with VISN and FMCN.

Valuation grid - $20.00 short term target is a discount to peer multiples
Share Price 10.00 11.00 11.56 12.00 13.00 14.00 15.00 16.00 17.00 18.00 19.00 20.00 24.90 28.00 28.23 F.D EV 275 314 336 354 393 433 472 512 551 591 631 670 864 986 996 EV/EBITDA 2009 2010 4.7 3.6 5.4 4.1 5.8 4.4 6.1 4.6 6.8 5.1 7.4 5.6 8.1 6.1 8.8 6.6 9.5 7.2 10.1 7.7 10.8 8.2 11.5 8.7 14.8 11.2 16.9 12.8 17.1 12.9 13.3 58.2 11.2 77.0 40.5 53.9 F.D EPS 2009 2010 1.16 1.36 1.16 1.36 1.16 1.36 1.16 1.36 1.16 1.36 1.16 1.36 1.16 1.36 1.16 1.36 1.16 1.36 1.16 1.36 1.16 1.36 1.16 1.36 1.16 1.36 1.16 1.36 1.16 1.36 F.D. PE 2009 2010 Comments 8.6 7.3 9.5 8.1 10.0 8.5 CCME price Mar 12, 2010 10.4 8.8 11.2 9.5 12.1 10.3 13.0 11.0 13.8 11.8 14.7 12.5 15.5 13.2 16.4 14.0 17.3 14.7 $20.00 short term target 21.5 18.3 $24.90 in line with peer 2010 EV/EBITDA 24.2 20.6 $28.00 12 month target 24.4 20.7 $28.23 DCF valuation

Peer median multiple CCME EBITDA mn USD CCME net income mn USD

CCME should trade at $24.90 to be in line with its peer median 2010 EV/EBITDA multiple. Thus our short term $20.00 target is conservative. SPAC Analytics Special Situation Research
8

March 12, 2010

China MediaExpress (CCME)

Technical Analysis

Source: Bloomberg

CCME has traded in a band between $10.00 to $14.00 since November. CCME briefly traded above $14.00 after the announcement of the Starr International $30M investment but subsequently traded lower with the weaker Chinese markets and additional selling pressure due to the warrant redemptions that ended at the end of January. We expect CCME to trade towards $20.00 if CCME closes above $14.00 ideally with positive fundamental news. A close below $10.00 is a bear signal.

Timeline
March 16 March 23 Anytime Anytime

Catalyst
Roth Capital annual OC Growth Stock Conference in Laguna Niguel, California Q4 audited results and 2010 guidance New acquisitions New bus operators added to the network

SPAC Analytics Special Situation Research

9

March 12, 2010

China MediaExpress (CCME)

General Disclaimers and Disclosures: This report was originally prepared and issued by SPAC Analytics for distribution to its professional investor customers. SPAC Analytics is a division of SPAC Investments Ltd. (SIL). The information contained herein is based on sources which we believe to be reliable, but is not necessarily complete and its accuracy cannot be guaranteed. Readers must evaluate, and bear all risks associated with, the use of any information provided hereunder, including any reliance on the accuracy, completeness, safety or usefulness of such information. This information is not intended to be used as the primary basis of investment decisions. All information in this report should be independently verified with the companies mentioned. This report is not to be construed as an offer or the solicitation of an offer to sell or buy the securities herein mentioned. Neither SIL, nor its officers, directors, partners, contributors or employees/consultants, accept any liability whatsoever for any direct or consequential loss arising from any use of information from this report. The firm and/or its employees may have positions in the securities mentioned and, before or after your receipt of this report, may make purchases and/or sales for their own accounts from time to time in the open market or otherwise. The opinions or information expressed are believed to be accurate as of the date of this report; no subsequent publication or distribution of this report shall mean or imply that any such opinions or information remains current at any time after the date of this report. All opinions are subject to change without notice, and we do not undertake to advise you of any such changes. Reproduction or redistribution of this report without the expressed written consent of SIL is prohibited. Additional information on any securities mentioned is available on request. Additional Disclosures: SIL is not an investment advisor registered with the Securities and Exchange Commission or with the securities regulators of any state, and at the present time is not eligible to file for federal registration. SIL is not acting as a broker dealer under any federal or state securities laws.

About SPAC Analytics: SPAC Analytics is a private research service that provides analysis of SPAC acquisitions and provides trade recommendations to portfolio managers. It was found by Neil Danics in March 2007. Neil Danics is recognized as a leading authority on SPACs and has been invited to present at several conferences and has recently been quoted in the Wall Street Journal, Washington post, Reuters, Dow Jones and several other businesses publications. Neil has developed an in-depth expertise analyzing SPACs having been a professional investor in SPACs for over five years and operating a research service that has analyzed over 100 SPAC acquisitions. The analysis is complemented by utilizing information from his large network of contacts in the investment community which includes hedge funds, investment banks and sales/trading desks that specialize in SPACs. For more information please go to www.spacanalytics.com

SPAC Analytics Special Situation Research

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