Research Intensive Investing

Noah Education: Profit from a Busted Chinese IPO

Hi,

Yes, they are relatively expensive. I probably should have called this out more clearly in my write-up. Estimated average disposable income per capita in China is about $800/year. For urban households, it's more like $1,500 a year. Noah's DLD's cost between $160-$240. Keep in mind that average disposable include includes millions of incredibly poor people, and hides the earnings power of China's rapidly growing middle class. I do not have numbers for that subsegment, but I would not be surprised if there is a relatively large segment of the population with $5-10k+ in income per year (and that this group is growing rapidly). Even if only 10% of China's population falls into that range, that is an addressable market of about 20M people.

Also, 85% of DLDs costs are input costs (flash memory, etc.) which should come down in price and make the DLD's more affordable over time. NED's content distribution through cell phones, etc. will also be more affordably priced for a larger segment of the population.