Focus Media Holding Limited (Ticker: FMCN)
Company Profile and Private Investigations

Company Profile:

Focus Media Holding Limited sells out-of-home television advertising time slots on their network of flat-panel television screens located in high traffic areas in commercial locations throughout China. The company’s flat-panel television displays are placed primarily in high-traffic areas of commercial office buildings, such as in lobbies and near elevators, as well as in retail chain stores, beauty parlors, karaoke parlors, golf country clubs, auto shops, banks, pharmacies, hotels, and airports. As of March 31, 2005, the company directly operated 16,025 flat-panel displays installed in 8,866 commercial locations in 22 cities in China. The company, through regional distributors, operated approximately 1,847 flat-panel displays in approximately 1,611 commercial locations in 22 cities in China, as of the above date. Focus Media Holding is headquartered in Shanghai, China.

Focus Media Holding Limited's own corporate website describes the company as follows:

Founded in 2003, Focus Media is the leading out-of-home audiovisual media network in China. Our commercial location network is the largest out-of-home television advertising network in China, which covers approximately 20,000 commercial buildings reaching millions of high-income individuals in 44 major cities. We allow our advertisers to target specific consumer segments by placing advertisements over our network.

We established our media network by installing super-thin flat-panel television displays in high-traffic areas, such as in the lobbies of commercial office buildings and at the aisles at large retail chain stores. These locations typically have a high concentration of consumers with higher-than-average disposable incomes or consumers who are likely to be interested in particular types of products and services. By the end of March 2005, we have successfully established long-term business relations with over 500 leading domestic and international brands, including Toyota, Siemens, Motorola, and China Telecom.

As of August 4, 2005, Focus Media trades at 201.01 price to sales ratio, and 439 enterprise value to EBITDA.  Well, Focus Media helps other companies to package well (for advertising), it certainly did a very good job for itself.  I haven't seen a company with such high valuation for a long time.  Is it worth investing in it?

Our Private Investigations:

Focus Media makes many claims on its market share in China.  Indeed, as the company specializes in advertising and "packaging" other companies, Focus Media certainly does an excellent job at "packaging" itself, creating an image and expectations beyond imagination.

However, is it true that Focus Media will have good prospects in China as it claimed? Why do some people say that "Focus Media" is a company that "focus [es]" on packaging itself in domestic and foreign "media"?

Please see our China Investment Report