$NWCN summary investment thesis:
A) Macro Trends - China's trend toward privatization is resulting in a nationwide push to modernize business, industry and consumer goods and services, resulting in unparalleled economic growth;
B) Spending Growth - Robust growth in per capita personal income has accelerated growth in both essential and discretionary consumer spending;
C) Target-Rich - With more household TVs, higher newspaper circulation, more mobile phone users, and more Internet users than any other country in the world, China's 1.3 billion consumers represent a target-rich market for global and domestic advertisers;
D) External Catalysts - The 2010 World Expo Shanghai are bringing global attention to China, as well as pushing government and the growing private sector to modernize China's transportation, commercial and media infrastructure;
E) Focus on Fastest Growing Advertising Segment - While spending on advertising in China is growing at approximately a 15% compounded annual growth rate, Network CN's Media Network division is focused on the Out-of-Home advertising segment;
F) Innovative Business Model - Network CN has a strong, innovative business model to take advantage of the macro and industry trends, focused on building a large-scale, nationwide advertising network of roadside LED video displays and mega-size LED video billboards;
G) Strong Competitive Position - Network CN maintains a strong competitive position with deep (and deepening) relationships with the local, regional and national government agencies that issue permits for outdoor advertising displays. The permitting process is a significant barrier to entry for would-be competitors. There are limits to the number of premium locations for displays, and working with the government through the permitting process is critical;
H) First-Mover Advantage - With a limited number of available permits, Network CN should have a first-mover advantage. The first to market with a nationwide network may capture as much as a 60% market share and command premium pricing from top-tier global and domestic advertisers;
I) Vertical Integration - Through acquisition and organic growth, Network CN is vertically integrating with advertising sales and content design agencies, as well as digital LED billboard and roadside panel ownership.
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