China MediaExpress: The Most Undervalued Stock Poised to Profit From China's Emerging Middle Class

for many Chinese companies. Its rates are low so they get paid quickly. This is unique for a Chinese companies. With CCME there is no fear of further dilution. The company's CFO recently stated, "we have sufficient resources to fund our business expansion plans, including internal growth initiatives as well as potential acquisitions.”

4) CCME has amazing growth. The Net Income target is $71-$75m this year, which would represent 79% growth from 2009. That $71-$75m range seems very conservative by management since the company did $18m Net Income in Q1 ($72m run rate) and it expects higher growth and margins the rest of the year. Management has a huge incentive to make $84m of net income this year in the form of earn out shares.

I believe the Company will make the $84m in net income this year. With approximately 40.5m fully diluted shares, EPS could range from the $1.85 guidance to over $2 if they hit the earn out target. FMCN, which is the best comparable in this sector, currently trades at a P/E of 17 based on the 2010 estimates of $0.94 EPS. To give CCME a P/E of 17, it would have a share price of $34 right now. This research report gives the company a $35 target and said CCME is discounted 68% to its peers.

This stock is incredibly undervalued given the above 4 discussion points. CCME, being a new listing, has yet to receive analyst coverage. The Company stated it has met with many analysts and institutions, so I personally expect coverage soon. Analysts typically assign P/E ratios anywhere from 10-30, depending on the Company. Because of the above discussion points I think CCME qualifies for a higher multiple. Lastly, CCME was recently selected to be added to the Russell Global Select fund.

CCME is the most undervalued stock poised to profit from China's emerging middle class.

Disclosure: I am long CCME.

About the author: super-trades.com

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