It really is great when you find a wealth-creating public company that has a sustained track record of making money for stockholders. One such company is Focus Media Holding Limited (NASDAQ/FMCN). This company was one of the first major Chinese stocks to generate significant interest from domestic investors.
I first wrote about this company in this column in January 2006. At that time, I began to make a serious effort to find great Chinese stocks listed on American stock exchanges. I knew that this sector of the market was going to be the best for speculative investors over the next several years.
Focus Media, founded in 2003, operates the largest “out-of-home” audiovisual advertising network in China. The company installs super-thin, flat-panel displays in high-traffic areas, such as elevator banks of commercial office buildings and in the aisles at large retail chain stores. The company provides an advertising platform to a high concentration of consumers with higher-than-average disposable incomes.
The company’s commercial operation is the largest office building audiovisual advertising network in China, targeting white-collar business professionals. As of the end of June 30, 2007, Focus Media was operating 131,000 LCD display units and 161,400 advertising poster frames, installed in over 90 cities throughout China and 200 outdoor LED displays in Shanghai. Advertisers using the company’s network include Toyota, P&G, China Telecom and Motorola.
Recently, Focus Media reported outstanding financial growth in its second quarter of 2007. According to the company, its revenues for the quarter were just over one-hundred and thirteen million dollars, representing an increase of 126% over revenues of approximately fifty million dollars generated in the second quarter of 2006.
Net income for the second quarter of 2007 was thirty-seven million dollars, representing an increase of 126% over net income of almost seventeen million dollars generated in the same quarter of last year.
Focus Media was chance for investment that just made good economic sense. The stock has already split two-for-one and the company’s prospects to expand throughout Asia are virtually endless. Chinese companies really do represent some of the best speculative opportunities in the world at this time. You have to take advantage of the growth while it lasts.