super-trades.com's  Instablog

A special purpose acquisition company, or (SPAC), (sometimes called a blank check company or an empty shell company), uses an initial public offering (IPO) to raise money it will use to purchase or merge with an existing company.

The acquisitions close after shareholder vote approval. It is not recommended to buy them prior to shareholder approval / acquisition close.  If they do not get an approved acquisition, SPAC's can sometimes liquidate and distribute cash back to shareholders.

There are 3 SPAC's about to conduct shareholder votes to purchase Chinese Companies:

1) TMI - TM Entertainment & Media, Inc.
Current Price : $7.50
Cash per last 10-Q - $81m
Current common O/S - 12.5m
Cash Per current common O/S = $6.48

Company to Acquire : China MediaExpress - CME is 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 16,000 express buses originating in eleven of China’s most prosperous regions, including the four municipalities of Beijing, Shanghai, Tianjin and Chongqing and seven economically prosperous provinces, namely Guangdong, Jiangsu, Fujian, Sichuan, Hebei, Anhui and Hubei, which generate nearly half of China’s GDP.

Date of Shareholder Vote on Acquisition - October 15, 2009

Approximate Fully Diluted Shares upon closing : 33 million

2008 Net Income : $26m
2009 Projected Net Income : $42m
2009 Projected EPS : Approximately $1.27 ($42m/33m O/S)
Competitor's P/E : FMCN trades at $12 with .65 avg EPS estimates = 18 P/E
VISN trades at $8.72 with .39 avg EPS estimates = 22 P/E
AMCN trades at $7 with .20 avg EPS estimates = 35 P/E

If TMI can achieve $1.27 EPS in 2009, a 15 P/E would be $19.05

super-trades 1-12 month target range if deal is approved - $13-$20

Investor Presentation

2) TTY - 2020 ChinaCap Acquirco Inc  (The Nike of China?)
Current Price : $7.90
Cash per last 10-Q - $68m
Current common O/S - 10.5m
Cash Per current common O/S = $6.48

Company to Acquire : WINDRACE INTERNATIONAL COMPANY LIMITED
Windrace designs, develops and engages in wholesale of footwear, apparel and accessories under its own brand, XIDELONG, in China. It is one of the leading domestic sports and leisurewear brands in China in terms of market share by sales revenue. Since operations began in 2002, Windrace has experienced significant growth in the mass market concentrated in the second and third tier cities in China and has established a market leading position as one of the top five Chinese sportswear brands. Windrace has three principal categories of products: (i) footwear, which comprises running, leisure, basketball, skateboarding and canvas footwear, (ii) apparel, which mainly comprises sports tops, pants, jackets, track suits and coats, and (iii) accessories, which mainly comprise bags, socks, hats and caps.

Date of Shareholder Vote on Acquisition - October 19, 2009

Approximate Fully Diluted Shares upon closing : 27 million

2008 Net Income : $24m
2009 Projected Net Income : $38m
2009 Projected EPS : Approximately $1.41 ($38m/27m O/S)
Competitor's P/E : NKE trades at $63 with $3.63 avg EPS estimates = 17 P/E
Per Page 7 of presentation, Chinese traded competitors avg 17 P/E

If TTY can achieve $1.41 EPS in 2009, a 15 P/E would be $21.15

super-trades 1-12 month target range if deal is approved - $13-$20

Investor Presentation

3) IDI - IDEATION ACQUISITION
Current Price : $7.85
Cash per last 10-Q - $79m
Current common O/S - 12.5m
Cash Per current common O/S = $6.32

Company to Acquire : SearchMedia
SearchMedia is a leading nationwide multi-platform media company and one of the largest operators of integrated outdoor billboard and in-elevator advertising networks in China. SearchMedia currently operates a network of over 1,500 high-impact billboards with over 500,000 square feet of surface display area and one of China's largest networks of in-elevator advertisement panels consisting of over 175,000 frames in 57 cities throughout China. SearchMedia ranked first in market share of in-elevator advertising displays in 13 out of the 26 most affluent cities in China and ranked second in an additional nine of these cities, according to Nielsen Media Research. Additionally, SearchMedia operates a network of large-format light boxes in concourses of eight major subway lines in Shanghai. SearchMedia's core outdoor billboard and in-elevator platforms are complemented by its subway advertising platform, which together enable it to provide multi-platform, "one-stop shop" services for its local, national and international advertising clients that numbered more than 780 cumulatively from its inception to July 31, 2009.

Date of Shareholder Vote on Acquisition - October 27, 2009

Approximate Fully Diluted Shares upon closing : 22 million

2008 Net Income : $16m
2009 Projected Net Income : $26m
2009 Projected EPS : Approximately $1.18 ($26m/22m O/S)
Competitor's P/E : FMCN trades at $12 with .65 avg EPS estimates = 18 P/E
VISN trades at $8.72 with .39 avg EPS estimates = 22 P/E
AMCN trades at $7 with .20 avg EPS estimates = 35 P/E

If IDI can achieve $1.18 EPS in 2009, a 15 P/E would be $17.70

super-trades 1-12 month target range if deal is approved - $12-$17

Investor Presentation

As of the date of this article, I have not bought these stocks.  I plan on waiting for the shareholder vote results.