China IPO: VisionChina Media

VisionChina Media (VISN) is expected to issue an American IPO this week. The company provides out-of-home advertising via digital television displays on mass transportation systems in China.

All quotations are from the company's most recent S-1 filing with links provided.

VISIONCHINA MEDIA (VISN)
Business Overview (from prospectus)

We believe that we operate the largest out-of-home advertising network using real-time mobile digital television broadcasts to deliver content and advertising on mass transportation systems in China based on the number of displays. We operate our advertising business in China through our consolidated affiliated entity, China Digital Mobile Television Co., Ltd., or CDMTV, due to PRC regulatory restrictions on foreign investments in the advertising and mobile digital television industries. Our relationships with CDMTV and its shareholders are governed by a series of contractual arrangements that allow us to effectively control and derive substantially all of the economic benefits from CDMTV. Our mobile digital television advertising network, or our network, which delivers real-time content provided by the local television stations in addition to advertising, differentiates us from other out-of-home advertising networks in China, and we believe this facilitates our future expansion into different advertising media platforms. Our advertising network consists of digital television displays located on buses and other selected locations that receive mobile digital television broadcasts of real-time content and advertising. As of September 30, 2007, our network covered 14 economically prosperous cities in China and consisted of approximately 33,000 digital television displays. In addition, we have expanded the geographic reach of our advertising operations by purchasing advertising time on existing mobile digital television networks in cities outside of our network to place advertisements pursuant to the demands of our clients. As a supplement to our mobile digital television advertising network, we also operate a stationary advertising platform in subway stations in two major cities in China, Guangzhou and Shenzhen.

Offering: 13.5 million shares at $9.50 - $11.50 per share. Net proceeds of approximately US$128.3 million will be used for the expansion of the company's network into new cities and new media platforms and for other general corporate purposes and for potential acquisitions of complementary businesses.

Lead Underwriters: Credit Suisse, Merrill Lynch

Financial Highlights:

We had total revenues of US$0.3 million, US$3.9 million and US$17.4 million for the period from April 8, 2005 (date of inception) to December 31, 2005, for the year ended December 31, 2006 and for the nine months ended September 30, 2007, respectively... Cost of revenues for the nine months ended September 30 2006 were $2.1 million as compared to $9.9 million for the same period in 2007... Gross profit margin was (17.8%) for the nine months ended September 30 2006 as compared to 42.4% for the same period in 2007.

Competition:

We compete with other advertising companies in China including companies that operate out-of-home advertising media networks such as Focus Media and other smaller mobile digital television companies. We also compete with traditional television stations for advertising spending. We compete for advertising clients primarily on the basis of network size and coverage, location, price, the range of services that we offer and our brand name. We also compete for overall advertising spending with other alternative advertising media companies, such as the Internet, street furniture, billboard, frame and public transport advertising companies, and with traditional advertising media, such as newspapers, magazines and radio. Some of our competitors operate digital television advertising networks installed on mass transportation systems primarily playing prerecorded content saved on compact flash cards or DVDs. For example, Towona Mobile Digital Co., Ltd. and Bus Online each operate a network on mass transportation systems utilizing compact flash cards, DVDs and, to a lesser extent, mobile digital television broadcasts in China including Beijing, Guangzhou, Nanjing, Shenzhen and several other cities where we operate our business. Towona was reported to be the largest “mobile television group in China” in a report released in November 2007 which was reported to be jointly sponsored by four market research firms.

Additional Resources:

• Company website
• Online road show
• AP: 'VisionChina sets expected terms of IPO'
• Tom Taulli: 'VisionChina : Fast-growing ad network looks for US IPO dollars'