the acquisition of fench star - tom’s cross media strategy ... · the acquisition of fench star -...
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The Acquisition of Fench Star -TOM’s Cross Media Strategy Continues
October 12, 2000
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MThe Deal
• 49% or more by TOM and the balance by TOM’s designated Mainland China companies
• Consideration of RMB278.6 million and RMB33.9 management incentive payable by:-
(1) asset swap; or
(2) new TOM shares at HK$5.51; or
(3) cash; or
(4) cash and new TOM shares
• Profit guarantee of no less than RMB100M from 2001 to 2003
As permitted by the PRC laws
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MTOM’S OVERALL VISION
Internetleadershipbeyond portal
Portal
Community163.net
Personalization
Leading portal in Greater China
Vertical Channels
Off-line Businesses
Search Engine
PortalStickiness & CriticalMass
Online & Offline Synergies
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0
1,000
2,000
3,000
4,000
5,000
6,000
1995 1996 1997 1998 1999 2000 2001 2002
OtherOutdoorRadioTVMagazinesNewspapers
China Advertising Market with Huge Growth
Source: Zenith Media, July 2000 & TOM Estimates
Advertising spending in US$ Million at current prices (US$1=RMB8.28)
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MChina Outdoor Advertising Market Growth
• During the period of 1995-2002, the CAGR of outdoor advertising is expected to be 17.8%.
• The market share of outdoor advertising is expected to increase from 9.3% in 1999 to 9.8% in 2002.
Source: Zenith Media, July 2000 & TOM Estimates
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MFench Star Advertising
• Established in 1992 in Kunming by a team of advertising professionals
• Largest outdoor media & advertising company in Western China
• Outdoor media agent covering 19 cities• Media Network covers:-
Spectacular
•Billboard•Neon•Giant Lightbox•Wall Ad•Crossover
Pedestrian
•Bus/Taxi Shelter•Pedestrian Lightbox•Hanging Lightbox•Telephone Booth
Transit
•Vehicle•Station/Terminal•Airport/Pier•Subway
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MFench Star Advertising Media Network
Spectacular
Giant Neon Billboard
Wall Ad.
Crossover Ad.
Billboard
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MFench Star Advertising Media Network (cont’d)
Pedestrian
Telephone booth Pedestrian Lightbox
Hanging Lightbox Bus Shelter Ad.
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MFench Star Advertising Media Network (cont’d)
Transit
Subway Billboard
Subway Billboard Airport Lightbox
Bus Ad.
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M Fench Star Advertising: Revenue Growth Potential
2746
77
1997A 1998A 1999A
Huge Growth Potential
CAGR = 47.8%RMB
inMillions
103127
2000F 2001F
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M Fench Star Advertising: Remarkable Profit Growth
71997A 1998A 1999A
Remarkable Contribution
CAGR = 101.9%
RMB in
Millions
11
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MFinancial HighlightsRMB MN 1999 1998 1997Revenue 76.7 45.6 26.7Operating profit 29.2 17.0 7.1Net profit 29.0 10.8 7.1Sales growth (yoy) 68% 71% --Net profit margin 38% 24% 27%
Total assets 137.2 95.8 46.8Net assets 88.8 67.4 37.0Debt 19.2 13.2 16.9Interest cover 30.5x 47.4x 12.1xCash on hand 57.7 35.4 1.8
P/E multiple 9.6x
Source : Management accounts
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M Fench Star / YC Press Advertising - Large Customer Base•Fench Star has over 300 customers including local tobacco,
pharmaceutical and travel companies as well as internationalbrands like Coca Cola and Kodak
•YC Press has substantial customer base including international brands like Siemens and Philips.
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M Fench Star Advertising - Future Development Strategy
• Dominate Western China’s outdoor advertising business
• Expand the network of premium outdoor media assets in major China cities
• Engage in newest and advanced outdoor product design (e.g. digital color display & rolling billboard)
• Leverage existing customer base and maximize cross-media synergistic benefits
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M Cross Media Synergies at Its Best
Benefits to TOM
• New Customer Base
•Advertising Expertise Advertisers
(YC Press) (TOM.COM/163.net/Shawei.com)
(Fench Star) (Fench Star)
Multi-faceted Media Assets with Cross Selling Advertising Capability
Print Outdoor Billboard Outdoor Neon OnlineTV
(YC Press)
Benefits to Fench Star
• New Channels of
Advertisement
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MTOM’s Cross Media VisionAlready Building a Cross Media Advertising Group
Achieved Future
To Source other OutdoorMedia and Advertising Company
in Major Cities of PRC
With Revenue ContributionPotential
Leading Cross-media Advertising Group in the PRC Advertising Industry
Estimated Revenue RMB350M