CBISMD Analysis of Investment Value: ChinaCache & ChinaNetCenter

PR Newswire — September 20, 2010

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:

(Photo: http://photos.prnewswire.com/prnh/20100920/CNM002-a ) (Photo: http://www.newscom.com/cgi-bin/prnh/20100920/CNM002-a ) (Photo: http://photos.prnewswire.com/prnh/20100920/CNM002-b ) (Photo: http://www.newscom.com/cgi-bin/prnh/20100920/CNM002-b )

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

Subject Codes: PC/t.100920080034730, PT/lang.en, IN/CPR, IN/ITE, IN/NET, SU/SVY, RE/China, PC/priority.r, PC/category.f, PC/WAVO_..b.ca, PC/APT_..b.c, PC/DataFeat_natl3, PC/circuit_b, PC/trade_c, PC/wavo3_b, PC/wavo5_c, PC/wavo6_a, PC/Billing_NCH, PC/Billing_US1, PC/Billing_IRW, PC/Billing_TNW, PC/Billing_RWB, PC/Billing_NDB, PC/1stAcc_908496, PC/port_26, PC/port_19, PC/port_96, PC/port_91, PC/port_32, PC/port_01, PC/port_30, PC/port_31, PC/port_99, PC/prnpriority_P2, PC/contact, PC/website, PC/photo, PC/id_CNM002

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