CBISMD Analysis of Investment Value: ChinaCache & ChinaNetCenter

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• USA - English

BEIJING, Sept. 20 /PRNewswire-Asia/ -- ChinaCache, with the spread of news about an IPO application in the U.S. and after a sharp drop in business in 2009, slightly improved revenue and continuing net loss in the first half of 2010 and rushed to Nasdaq again with great courage, giving the opportunity to see the company's key financial data.

Likewise, as one of the largest CDN service providers, ChinaNetCenter (stock code: 300017), providing the same services as ChinaCache, has been questioned because of its declining performance after being listed on China GEM (Growth Enterprises Market) board.

Comparison of the two formal public financial datasheets will help to lift the mysterious veil of the CDN industry and explore the real investment value. The full report from CBISMD follows:

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                 ChinaNetCenter financial data from 2005 to 2010
                               Monetary unit: RMB Yuan

    Items                           Year 2005     Year 2006      Year 2007

    Operating revenue                      --    69,009,500    119,323,092
    Net profit attributable
     to shareholders of
     listed companies                      --    16,241,200     25,481,168
    Consolidated gross
     profit margin                         --        44.76%         42.93%
    Growth rate of CDN
     business (year-on-year)               --            --        181.41%


    Items                           Year 2008     Year 2009  First half of
                                                             the year 2010

    Operating revenue             239,031,077   287,013,386    150,093,015
    Net profit attributable
     to shareholders of
     listed companies              37,078,501    38,851,373     14,983,248
    Consolidated gross
     profit margin                     35.50%        33.80%         33.59%
    Growth rate of CDN
     business (year-on-year)          239.64%        58.78%         27.38%



                     ChinaCache financial data from 2005 to 2010
                                 Monetary unit: RMB Yuan

    Items                           Year 2005     Year 2006      Year 2007

    Net revenues                   47,025,000    70,033,000    160,973,000
    Net loss                        5,278,000    29,790,000     87,913,000
    Net loss attributable
     to ordinary shareholders       7,378,000    36,397,000     99,215,000
    Consolidated gross
     profit margin                     44.06%        33.20%         -6.17%
    Growth rate of CDN
     business (year-on-year)               --        48.93%        129.85%


    Items                           Year 2008     Year 2009  First half of
                                                             the year 2010

    Net revenues                  291,404,000   272,370,000    170,342,000
    Net loss                      151,800,000    39,167,000     24,201,000
    Net loss attributable
     to ordinary shareholders     162,981,000    75,244,000     52,026,000
    Consolidated gross
     profit margin                      6.23%        24.30%         30.45%
    Growth rate of CDN
     business (year-on-year)           81.03%        -6.53%         28.86%


    (Data Source: Application Document F-1 for IPO in the U.S. ChinaCache
    reported to the Securities and Exchange Commission (SEC) and China Net
    Center Public Financial Report)

Revenue: ChinaCache Slightly Better than ChinaNetCenter

The two recently released financial datasheets showing that in the first half of 2010, ChinaCache had a net income RMB 170.34 million, and ChinaNetCenter had business income of RMB 150.09 million over the same period.

From the year 2006 to 2009, ChinaCache had a net income increased from RMB 70 million to RMB 272 million, nearly 3.9 times, but the gross profit growth did not follow. For ChinaNetCenter, from the year 2006 to 2009, business income increased from 69 million to RMB 287 million, nearly 4.2 times, and the consolidated gross profit margin remained above 33% for four consecutive years.

CDN Business Growth Rate: ChinaNetCenter Overall Better Than ChinaCache

In the first half of 2010, the CDN business growth rates of ChinaCache and ChinaNetCenter were 28.86% and 27.38% respectively, with little difference.

Throughout the years from 2007 to 2009, despite a slowdown in 2009, ChinaNetCenter CDN business growth maintained a rapid growth on the whole, and the growth rates were 181.41%, 239.64%, 58.78% respectively. In the same period, ChinaCache's CDN business growth rate showed a decreasing trend, 129.85%, 81.03%, -6.53%, respectively. It was negative in 2009, reaching its lowest point.

Net Profit: ChinaCache Sustained Loss, ChinaNetCenter Continuous Growth

In the first half of 2010, ChinaNetCenter net profit attributable to shareholders of listed companies was RMB 14.98 million, while ChinaCache net loss was RMB 24.20 million. Since 2005, five consecutive years of losses brought losses amounting to RMB 151 million for ChinaCache, which was even worse in 2008. A comparison of data over the past five years showed a strange phenomenon for ChinaCache of more income, more loss.

Over the years from 2006 to the first half of 2010, ChinaNetCenter net profit has maintained a constant growth. In 2008, its net profit amounted to RMB 37 million.

Consolidated Gross Profit Margin: ChinaCache lower Than ChinaNetCenter

Over the years from 2006 to the first half of 2010, ChinaNetCenter consolidated gross profit margins for four and a half consecutive years have always been above 30%, i.e., 44.76%, 42.93%, 35.50%, 33.80%, and 33.59%, respectively. During the years 2005 and 2006, ChinaCache gross profit margin averaged above 30%, which was 44.06% and 33.20%, respectively, while it was -6.17% in 2007. Since then, its gross margins have not ever reached the level of the previous two years, far below those of ChinaNetCenter.

Key Customers: Both Have Their Own Characteristics

By June 30, 2010, ChinaCache had 418 customers, among which China Mobile was the largest one. ChinaCache has always been the main CDN provider for Sina, Netease, Sohu, and Tencent, the Internet portals that have the greatest demand for CDN, and now only two portals -- Sohu and Tencent -- have contributed a small amount of income to ChinaCache.

ChinaNetCenter has 2,000 customers currently, among which Tencent is the largest. In addition, ChinaNetCenter is the main CDN provider for Tencent, Netease, Sohu and Sina, the four Chinese Internet portals.

    The Source of Data:
    http://tinyurl.com/ChinaCache-SEC-Filing
    http://chinext.cninfo.com.cn/newmarket/gszx.html?gsgg/lsgg?lsgg300017


    For more information, please contact:

     Huo Junting
     Phone: +86-6217-8877

SOURCE CBISMD