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'HOT' CCSC IPO -- report updated to IPO price of $!6.50

Financial valuation ratios updated to IPO price of $16.50

Country Style Cooking Rest (NYSE:CCSC), $65mm IPO
Market cap $413mm at the IPO price of $16.50, above increased range
Scheduled for Tuesday, Sept 28
Each Chinese ADS represents four ordinary shares.

SUMMARY
. Fast-growing, profitable quick service restaurant in China
. Wants to be the McDonalds’ or Kentucky Fried Chicken equivalent in China
9% after tax margin compares to 20% margin for McDonalds
. IPO proceeds targeted to finance growth
. Stock will probably open at a significant premium in the IPO

BUSINESS
. Largest quick service restaurant chain in Chongqing municipality in terms of the number of restaurants as of March 31, 2010 and total sales in 2009, according to Euromonitor.
. 101 restaurants as of June 30, 2010, including 56 restaurants in Chongqing municipality and 31 restaurants in Sichuan province
. Directly operates all restaurants for effective quality control and operating efficiency

MARKET GROWTH
. According to Euromonitor, the Chinese quick service restaurant sector has grown from RMB253.8 billon in 2004 to RMB470.6 billion ($69.4 billion) in 2009,
. Representing a CAGR of 13.1% over the five-year period.
. Euromonitor estimated that the Chinese quick service restaurant market would grow to RMB766.7 billion ($113.1 billion) in 2014, representing a CAGR of 10.3% from 2009.

COMPARABLE SALES GROWTH
Comparable sales growth per restaurants
: 2009 over 2008:  10.5%
. June 6 months 2010 over June six months 2009: 7.3%
GROWTH PLAN
. Plan to increase the number of restaurants to over 130 by the end of 2010.  Up from 101 as of June 30, 2010, which is up from 62 as of June 30, 2009
. Average traffic per restaurant per day of approximately 1,600 customers and the average table turnover per day of approximately 16 times for our restaurant chain for the six months ended June 30, 2010.

COMPETITION
Includes McDonald’s, KFC and Yoshinoya and various domestic competitors

EMPLOYEES
As of June 30, 2010:  4,773

TAXATION
Cayman Islands
CCSC is an exempted company incorporated in the Cayman Islands and are not subject to income or capital gains tax in this jurisdiction.
Hong Kong
CCSC’s subsidiary in Hong Kong, CSC Hong Kong, is subject to a corporate income tax of 16.5% on the estimated assessable profit derived from its Hong Kong operation. CSC Hong Kong had no assessable profits during the years ended December 31, 2007, 2008 and 2009 and the first half of 2010, and accordingly has made no provision for its income tax.
PRC (China)
 CCSC’s subsidiaries in China are companies incorporated under PRC law and, as such, are subject to PRC enterprise income tax on their taxable income in accordance with the relevant PRC income tax laws.

HISTORY
. In September 2007, CSC Cayman issued 24,000,000 Series A preferred shares to two international private equity funds for an aggregated amount of $13.0 million. Among these $13.0 million, $5.0 million were paid to CCSC founders in 2007 in consideration of their past services and their agreement not to compete with CCSC.
. Then purchased 32 restaurant operating assets for RMB9.2 million ($1.4 million) and 2,800,000 shares of our ordinary shares (four shares = one ADR)

USE OF IPO PROCEEDS
$58mm
•  34.6 million to open new restaurants (the estimated costs associated with the opening of a new restaurant are between $0.2 million to $0.3 million);
• $11.5 million for improving and expanding logistic infrastructure, including central kitchens (the estimated costs associated with the building of a central kitchen, including land-use right purchase and construction costs, are between $2.5 million to $3.5 million), a national sauce packaging center, regional logistic centers, and IT infrastructure; and
•  Balance for working capital and other general corporate purposes.

Financial valuation ratios updated to IPO price of $16.50




Disclosure: none