ChinaCast Education Corporation - PowerPoint PPT Presentation


Title: ChinaCast Education Corporation


1
ChinaCast Education Corporation The Rise of the
For Profit Education Industry in China
Ron Chan, Chairman CEO ICR Asia Xchange
Conference December 5, 2007 NASDAQ
CAST www.chinacasteducation.com
2
Safe Harbor Statement
This presentation contains forward-looking
statements. These statements are made under the
safe harbor provisions of the U.S. Private
Securities Litigation Reform Act of 1995. These
forward looking statements can be identified by
terminology such as will, expects,
anticipates, future, intends, plans,
believes, estimates and similar statements.
ChinaCast may also make written or oral
forward-looking statements in its periodic
reports to the U.S. Securities and Exchange
Commission, in its annual report to shareholders,
in press releases and other written materials and
in oral statements made by its officers,
directors or employees to third parties.
Statements that are not historical facts,
including statements about ChinaCasts beliefs
and expectations, are forward-looking statements.
Forward-looking statements involve inherent
risks and uncertainties. Further information
regarding these risks and uncertainties is
included in our registration statement and other
documents filed with the Securities and Exchange
Commission. ChinaCast does not undertake any
obligation to update any forward-looking
statement, except as required under applicable
law.
3
ChinaCast Education Corporate Overview
  • Leader in e-learning and training services in the
    rapidly growing China education sector
  • Established in 1999 and headquartered in Beijing
    with over 300 employees
  • Common stock (CAST), warrants (CASTW) and units
    (CASTU) currently quoted on NASDAQ Global Market
  • Market Capitalization 212M (As of 12/05/07)
  • Cash Balance 98M (as of 9/30/07 no debt)
  • Shares Outstanding 27.3M
  • Warrants 9M warrants exercisable at 5.00
  • Callable by company once stock closes at 8.50 or
    higher for any 20 consecutive trading days
  • Key Shareholders Management (24), Hughes
    Network Systems (13), Intel Capital (9)

4
Our Goal is to be a Leader in the PRC For-Profit
Education Sector
  • To achieve this goal, we are transitioning from a
    B2B e-learning provider to a full service
    for-profit B2C education brand operating both
    e-learning and traditional school education
    services
  • E-Learning
  • Leader in B2B e-learning and training services
    for post-secondary, K-12 and vocational/career
    education sectors
  • Traditional Schools
  • Acquisition strategy targeting well known,
    accredited universities and vocational/career
    training schools with a focus on the 18-35 year
    old education market segment
  • Recently established eight Daily English Language
    Training Centers in Beijing will expand to over
    20 centers in 2008
  • Announced acquisition of Wuhan Media
    Communications College of Huazhong Normal
    University (IT/Media/Computer Animation)
  • 51 acquisition for US30m-32m deal targeted to
    close early Q1 2008
  • Announced acquisition of Foreign Trade Business
    College of Chongqing Normal University
    (Business/Finance/Economics/Tourism)
  • 70 - 80 acquisition for US56m-64m deal
    targeted to close early Q1 2008

5
Our Corporate Strategy
  • Our Strategy Is To
  • Continue to grow our existing B2B e-learning
    business
  • Acquire bricks and mortar schools to transition
    from a B2B e-learning provider to a B2C
    nationwide education brand focusing on
    post-secondary and vocational/career
  • Benefit from the synergies created between our
    bricks and mortar schools and our e-learning
    business by using the content owned by the
    schools and distributing it through our
    nationwide e-learning network

Estimated Revenue Mix
Revenue
5
6
Our MA Strategy
  • Post Secondary Schools
  • Over 300 private universities in China
  • Plan to acquire a minimum of 3-4 institutions
    within next 18 mos. to enhance program offering
    geographic reach
  • Become nationwide B2C education name

Deploy cash (US140M post warrants) to acquire
  • Vocational/Career Schools
  • Expand Daily English nationwide and expand course
    offerings
  • New vocational/career school acquisition targets
    (IT, Health, Management, Finance, etc.)
  • Disciplined MA strategy based on
  • Risk adjusted returns in excess of our cost of
    capital
  • Synergies / cost savings opportunities
  • Management expertise
  • Accretive to earnings within reasonable time
    period

6
7
Growth in Education Services in China is Very
Strong
10 GDP Growth 60B FDI
CAGR of 13.5 for Consumer Spending 2003A-2010E
Govt. spend is 3.8 of GDP, up 26Bn from 04-05
10 of HH Income Spent on Education One Child
Policy
600m Pop in Prime Education Age (5-29)
Underlying Macroeconomic Fundamentals are Solid
750m Workers to Up-Grade Job Skills
Source US DOE, PRC Min. of Education, Economic
Intelligence Unit
8
For Profit Education is the Next Wave of
Education in China
  • Compelling market dynamics for high quality
    education services providers
  • Formal education system largest in the world with
    over 235m students, 550k schools and 10m teachers
  • Strong enrollment growth creates revenue and
    earnings visibility
  • Highly scalable business model with barriers to
    entry
  • Demand outweighs supply
  • In 2005, the PRC had over 100m university
    qualified applicants but only 15m physical seats
  • PRC for-profit education industry is still in its
    infancy
  • In 1991, Devry was the only publicly listed for
    profit education company in the US
  • By 1996, there were over 40 US publicly listed
    for profit education companies with combined
    market cap of gt US20B

Source US DOE, PRC Min. of Education
9
Segment Overview
  • I. E-Learning Segment

10
Demand for Online Education Services is Taking
Off
Internet Statistics
Estimated Online Education Market Size (CAGR USA
33, PRC 27)
US B
As in the USA, internet penetration will be a key
driver for PRC online education growth
Source iResearch PRC Distance Learning Report,
Eduventures, InternetWorldStats.com
11
We Have a Nationwide E-Learning Network
  • Network Operations Center in Beijing broadcasting
    via AsiaSat 3s Ku-band Satellite
  • Nationwide broadband VSAT, ISP and ICP license
    from MII
  • Proprietary interactive e-learning software
    platform
  • Over 7,000 remote e-learning centers

12
With Multiple Streams of Recurring Service Income
2006 Revenue 22.3M
Post-Secondary 38
K-12 41
Vocational/Career 21
Teacher training content broadcast to over 6,500
K-12 schools (subscription based revenue model)
Distance learning services to 15 universities -
over 116,000 students (tuition based revenue
model)
Training services for government ministries and
corporate enterprises (subscription based revenue
model)
13
Segment Overview
  • II. Traditional Schools

14
Demand for English Training Services is Taking
Off
Increase in Salary Due to English Training Level
PRC English Language Training Market
US B
CAGR 12
73
24
Source China Education Training Industry
Report, ChinaHR.com
15
Daily English Language Training Schools
  • First bricks and mortar school acquisition and
    entry into the US2B PRC language training market
  • Commenced operations of initial 8 Daily English
    schools in Beijing in July 2007
  • Will expand to 20 nationwide training centers by
    end of 2008
  • Potential expansion into Kids English,
    Comprehensive English, Test Prep
  • Major corporate customers including Nokia,
    Microsoft, Toyota, Motorola, Lucent, Min. of
    Public Security
  • Plans to leverage ChinaCasts nationwide network
    of e-learning school partnerships

16
Demand for Post-Secondary Education Services is
Taking Off
Post Secondary Enrollment (CAGR USA 1, PRC 23)
Impact of Education on Median Annual Salaries in
the PRC
Students (m)
2.3x
1.7x
1.0x
  • In 2005, the PRC had almost the same number of
    post-secondary students as the US (16M) but less
    than half the number of colleges
  • (US-4,182 PRC-1,792)

Sources US Dept. of Education, PRC Ministry of
Education, ChinaHR
17
Wuhan Media Communications College (WMCC) of
Huazhong Normal University
  • ChinaCast has signed MOU to acquire 51 of WMCC
    for approximately US30-32m. Deal targeted to
    close and be accretive in early Q1 FY08.
  • Acquisition to include real estate, buildings,
    management team and faculty.
  • WMCC is an independent college affiliated with
    Huazhong Normal University in Wuhan, one of the
    top 5 education cities in China. It has a campus
    of over 52 acres and over 350 full-time teaching
    staff.
  • For the academic year started in September 2007,
    WMCC had over 6,500 on-campus students enrolled.
    Annual tuition fees range from US987 to
    US2,500.
  • WMCC has estimated its revenue to be US10.9m and
    net profit to be US3.9m for it Academic Year
    2007 (beginning Sept. 2007).
  • WMCC offers job-oriented 4 year bachelor degrees
    and 2 year diploma degrees in IT, digital media,
    computer animation, news production, e-commerce,
    business management, music, performing arts and
    English.
  • Degree and diploma programs are fully accredited
    by the Ministry of Education.

18
Foreign Trade and Business College (FTBC) of
Chongqing Normal University
  • ChinaCast has signed a MOU to acquire 70-80 of
    FTBC for approximately US56-64m respectively.
    Deal targeted to close and be accretive in early
    Q1 FY08.
  • Acquisition to include real estate, buildings,
    management team and faculty.
  • FTBC is an independent college affiliated with
    Chongqing Normal University in Chongqing, Chinas
    largest municipality in terms of area and
    population. It has a campus of over 132 acres
    and over 900 full-time teaching staff.
  • For the academic year started in September 2007,
    FTBC had over 10,000 on-campus students enrolled.
    Annual tuition fees range from US1,067 to
    US1,467.
  • FTBC has estimated its revenue to be US15.1m and
    net profit to be US6.3m for its Academic Year
    2007 (beginning Sept. 2007).
  • FTBC offers job-oriented 4 year bachelor degrees
    and 2 year diploma degrees in finance, economics,
    trade, tourism management, advertising, language,
    IT and music.
  • Degree and diploma programs are fully accredited
    by the Ministry of Education.

19
Our Management Team is Seasoned Experienced
Extensive Experience Working With Public
Shareholders in China, Hong Kong, Singapore and
US Stock Exchanges.
20
Our Board of Directors Have Strong Leadership
Experience
21
FY2004 FY2007 US GAAP Financials
Margin
RMB (m)
US17.1m
US5.9m
  • Notes The net income figures have been adjusted
    for non-recurring items shown below
  • 2004 includes RMB 23m in share option expenses.
    The figure for 2005 and 2006 were RMB 2m and
    RMB1m respectively.
  • 2006 includes RMB 17m in non-recurring costs due
    to investment impairment loss and professional
    fees associated with GWAQ reverse merger

21
22
Why ChinaCast Education?
  • Attractive Financial Model in Exciting Consumer
    Growth Sector in China
  • High margin, cash generative, recurring service
    income
  • Education market is one of the largest and
    fastest growing in China driven by growing
    consumption power and increasing investment by
    the government and private sector
  • Sound Growth Strategy
  • Focus on expanding post-secondary traditional
    bricks and mortar school business through
    acquisition to become major player in emerging
    PRC for-profit education market
  • Unique Positioning in Education Sector
  • Long term trusted relationships with
    post-secondary institutions and Ministry of
    Education
  • Seasoned Multinational Management Team
  • Proven track record in creating shareholder value
    and corporate governance
  • Strong Balance Sheet (140M cash post warrants
    no debt)
  • Acquisitive growth opportunities in private
    education sector

23
Thank You
Ron Chan, Chairman and CEO Email
ronchan_at_chinacasteducation.com IR
www.chinacasteducation.com
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Title: ChinaCast Education Corporation


1
ChinaCast Education Corporation The Rise of the
For Profit Education Industry in China
Ron Chan, Chairman CEO ICR Asia Xchange
Conference December 5, 2007 NASDAQ
CAST www.chinacasteducation.com
2
Safe Harbor Statement
This presentation contains forward-looking
statements. These statements are made under the
safe harbor provisions of the U.S. Private
Securities Litigation Reform Act of 1995. These
forward looking statements can be identified by
terminology such as will, expects,
anticipates, future, intends, plans,
believes, estimates and similar statements.
ChinaCast may also make written or oral
forward-looking statements in its periodic
reports to the U.S. Securities and Exchange
Commission, in its annual report to shareholders,
in press releases and other written materials and
in oral statements made by its officers,
directors or employees to third parties.
Statements that are not historical facts,
including statements about ChinaCasts beliefs
and expectations, are forward-looking statements.
Forward-looking statements involve inherent
risks and uncertainties. Further information
regarding these risks and uncertainties is
included in our registration statement and other
documents filed with the Securities and Exchange
Commission. ChinaCast does not undertake any
obligation to update any forward-looking
statement, except as required under applicable
law.
3
ChinaCast Education Corporate Overview
  • Leader in e-learning and training services in the
    rapidly growing China education sector
  • Established in 1999 and headquartered in Beijing
    with over 300 employees
  • Common stock (CAST), warrants (CASTW) and units
    (CASTU) currently quoted on NASDAQ Global Market
  • Market Capitalization 212M (As of 12/05/07)
  • Cash Balance 98M (as of 9/30/07 no debt)
  • Shares Outstanding 27.3M
  • Warrants 9M warrants exercisable at 5.00
  • Callable by company once stock closes at 8.50 or
    higher for any 20 consecutive trading days
  • Key Shareholders Management (24), Hughes
    Network Systems (13), Intel Capital (9)

4
Our Goal is to be a Leader in the PRC For-Profit
Education Sector
  • To achieve this goal, we are transitioning from a
    B2B e-learning provider to a full service
    for-profit B2C education brand operating both
    e-learning and traditional school education
    services
  • E-Learning
  • Leader in B2B e-learning and training services
    for post-secondary, K-12 and vocational/career
    education sectors
  • Traditional Schools
  • Acquisition strategy targeting well known,
    accredited universities and vocational/career
    training schools with a focus on the 18-35 year
    old education market segment
  • Recently established eight Daily English Language
    Training Centers in Beijing will expand to over
    20 centers in 2008
  • Announced acquisition of Wuhan Media
    Communications College of Huazhong Normal
    University (IT/Media/Computer Animation)
  • 51 acquisition for US30m-32m deal targeted to
    close early Q1 2008
  • Announced acquisition of Foreign Trade Business
    College of Chongqing Normal University
    (Business/Finance/Economics/Tourism)
  • 70 - 80 acquisition for US56m-64m deal
    targeted to close early Q1 2008

5
Our Corporate Strategy
  • Our Strategy Is To
  • Continue to grow our existing B2B e-learning
    business
  • Acquire bricks and mortar schools to transition
    from a B2B e-learning provider to a B2C
    nationwide education brand focusing on
    post-secondary and vocational/career
  • Benefit from the synergies created between our
    bricks and mortar schools and our e-learning
    business by using the content owned by the
    schools and distributing it through our
    nationwide e-learning network

Estimated Revenue Mix
Revenue
5
6
Our MA Strategy
  • Post Secondary Schools
  • Over 300 private universities in China
  • Plan to acquire a minimum of 3-4 institutions
    within next 18 mos. to enhance program offering
    geographic reach
  • Become nationwide B2C education name

Deploy cash (US140M post warrants) to acquire
  • Vocational/Career Schools
  • Expand Daily English nationwide and expand course
    offerings
  • New vocational/career school acquisition targets
    (IT, Health, Management, Finance, etc.)
  • Disciplined MA strategy based on
  • Risk adjusted returns in excess of our cost of
    capital
  • Synergies / cost savings opportunities
  • Management expertise
  • Accretive to earnings within reasonable time
    period

6
7
Growth in Education Services in China is Very
Strong
10 GDP Growth 60B FDI
CAGR of 13.5 for Consumer Spending 2003A-2010E
Govt. spend is 3.8 of GDP, up 26Bn from 04-05
10 of HH Income Spent on Education One Child
Policy
600m Pop in Prime Education Age (5-29)
Underlying Macroeconomic Fundamentals are Solid
750m Workers to Up-Grade Job Skills
Source US DOE, PRC Min. of Education, Economic
Intelligence Unit
8
For Profit Education is the Next Wave of
Education in China
  • Compelling market dynamics for high quality
    education services providers
  • Formal education system largest in the world with
    over 235m students, 550k schools and 10m teachers
  • Strong enrollment growth creates revenue and
    earnings visibility
  • Highly scalable business model with barriers to
    entry
  • Demand outweighs supply
  • In 2005, the PRC had over 100m university
    qualified applicants but only 15m physical seats
  • PRC for-profit education industry is still in its
    infancy
  • In 1991, Devry was the only publicly listed for
    profit education company in the US
  • By 1996, there were over 40 US publicly listed
    for profit education companies with combined
    market cap of gt US20B

Source US DOE, PRC Min. of Education
9
Segment Overview
  • I. E-Learning Segment

10
Demand for Online Education Services is Taking
Off
Internet Statistics
Estimated Online Education Market Size (CAGR USA
33, PRC 27)
US B
As in the USA, internet penetration will be a key
driver for PRC online education growth
Source iResearch PRC Distance Learning Report,
Eduventures, InternetWorldStats.com
11
We Have a Nationwide E-Learning Network
  • Network Operations Center in Beijing broadcasting
    via AsiaSat 3s Ku-band Satellite
  • Nationwide broadband VSAT, ISP and ICP license
    from MII
  • Proprietary interactive e-learning software
    platform
  • Over 7,000 remote e-learning centers

12
With Multiple Streams of Recurring Service Income
2006 Revenue 22.3M
Post-Secondary 38
K-12 41
Vocational/Career 21
Teacher training content broadcast to over 6,500
K-12 schools (subscription based revenue model)
Distance learning services to 15 universities -
over 116,000 students (tuition based revenue
model)
Training services for government ministries and
corporate enterprises (subscription based revenue
model)
13
Segment Overview
  • II. Traditional Schools

14
Demand for English Training Services is Taking
Off
Increase in Salary Due to English Training Level
PRC English Language Training Market
US B
CAGR 12
73
24
Source China Education Training Industry
Report, ChinaHR.com
15
Daily English Language Training Schools
  • First bricks and mortar school acquisition and
    entry into the US2B PRC language training market
  • Commenced operations of initial 8 Daily English
    schools in Beijing in July 2007
  • Will expand to 20 nationwide training centers by
    end of 2008
  • Potential expansion into Kids English,
    Comprehensive English, Test Prep
  • Major corporate customers including Nokia,
    Microsoft, Toyota, Motorola, Lucent, Min. of
    Public Security
  • Plans to leverage ChinaCasts nationwide network
    of e-learning school partnerships

16
Demand for Post-Secondary Education Services is
Taking Off
Post Secondary Enrollment (CAGR USA 1, PRC 23)
Impact of Education on Median Annual Salaries in
the PRC
Students (m)
2.3x
1.7x
1.0x
  • In 2005, the PRC had almost the same number of
    post-secondary students as the US (16M) but less
    than half the number of colleges
  • (US-4,182 PRC-1,792)

Sources US Dept. of Education, PRC Ministry of
Education, ChinaHR
17
Wuhan Media Communications College (WMCC) of
Huazhong Normal University
  • ChinaCast has signed MOU to acquire 51 of WMCC
    for approximately US30-32m. Deal targeted to
    close and be accretive in early Q1 FY08.
  • Acquisition to include real estate, buildings,
    management team and faculty.
  • WMCC is an independent college affiliated with
    Huazhong Normal University in Wuhan, one of the
    top 5 education cities in China. It has a campus
    of over 52 acres and over 350 full-time teaching
    staff.
  • For the academic year started in September 2007,
    WMCC had over 6,500 on-campus students enrolled.
    Annual tuition fees range from US987 to
    US2,500.
  • WMCC has estimated its revenue to be US10.9m and
    net profit to be US3.9m for it Academic Year
    2007 (beginning Sept. 2007).
  • WMCC offers job-oriented 4 year bachelor degrees
    and 2 year diploma degrees in IT, digital media,
    computer animation, news production, e-commerce,
    business management, music, performing arts and
    English.
  • Degree and diploma programs are fully accredited
    by the Ministry of Education.

18
Foreign Trade and Business College (FTBC) of
Chongqing Normal University
  • ChinaCast has signed a MOU to acquire 70-80 of
    FTBC for approximately US56-64m respectively.
    Deal targeted to close and be accretive in early
    Q1 FY08.
  • Acquisition to include real estate, buildings,
    management team and faculty.
  • FTBC is an independent college affiliated with
    Chongqing Normal University in Chongqing, Chinas
    largest municipality in terms of area and
    population. It has a campus of over 132 acres
    and over 900 full-time teaching staff.
  • For the academic year started in September 2007,
    FTBC had over 10,000 on-campus students enrolled.
    Annual tuition fees range from US1,067 to
    US1,467.
  • FTBC has estimated its revenue to be US15.1m and
    net profit to be US6.3m for its Academic Year
    2007 (beginning Sept. 2007).
  • FTBC offers job-oriented 4 year bachelor degrees
    and 2 year diploma degrees in finance, economics,
    trade, tourism management, advertising, language,
    IT and music.
  • Degree and diploma programs are fully accredited
    by the Ministry of Education.

19
Our Management Team is Seasoned Experienced
Extensive Experience Working With Public
Shareholders in China, Hong Kong, Singapore and
US Stock Exchanges.
20
Our Board of Directors Have Strong Leadership
Experience
21
FY2004 FY2007 US GAAP Financials
Margin
RMB (m)
US17.1m
US5.9m
  • Notes The net income figures have been adjusted
    for non-recurring items shown below
  • 2004 includes RMB 23m in share option expenses.
    The figure for 2005 and 2006 were RMB 2m and
    RMB1m respectively.
  • 2006 includes RMB 17m in non-recurring costs due
    to investment impairment loss and professional
    fees associated with GWAQ reverse merger

21
22
Why ChinaCast Education?
  • Attractive Financial Model in Exciting Consumer
    Growth Sector in China
  • High margin, cash generative, recurring service
    income
  • Education market is one of the largest and
    fastest growing in China driven by growing
    consumption power and increasing investment by
    the government and private sector
  • Sound Growth Strategy
  • Focus on expanding post-secondary traditional
    bricks and mortar school business through
    acquisition to become major player in emerging
    PRC for-profit education market
  • Unique Positioning in Education Sector
  • Long term trusted relationships with
    post-secondary institutions and Ministry of
    Education
  • Seasoned Multinational Management Team
  • Proven track record in creating shareholder value
    and corporate governance
  • Strong Balance Sheet (140M cash post warrants
    no debt)
  • Acquisitive growth opportunities in private
    education sector

23
Thank You
Ron Chan, Chairman and CEO Email
ronchan_at_chinacasteducation.com IR
www.chinacasteducation.com
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