EastBridge Investment Group, Inc. (OTC-BB: EBIG), a provider of financial and related services to Asian companies seeking to list on U.S. stock exchanges, could realize significant value from the initial public offering of its client Tsingda Education – an education company similar to China Education Alliance, Inc. (NYSE: CEU) or ChinaEdu Corporation (Nasdaq: CEDU) – in which it holds an equity stake.
EastBridge Investment Group, Inc. (OTC-BB: EBIG) is a financial services company that assists Asian clients with auditing, legal and investor relations processes to help them become public companies listed on U.S. exchanges. In exchange, the company receives a combination of cash fees and equity compensation that typically amounts to a 10-20% equity stake.
China’s Education Market is Booming
China’s economy may be showing signs of a slowdown amid government measures to curb lending and deflate possible asset bubbles like the housing market in Beijing. However, the domestic economy continues to boom as the middle class rapidly expands in terms of both wealth and population. As a result, there are many companies that could stand to gain significantly.
The boom has created enormous demand for educational services from rural populations that have migrated into the metropolitan cities. Currently, education accounts for approximately 11% of the average household spending, while the government has already increased its spending on education from 2.8% of GDP in 2006 to more than 4% in 2010, according to Wall Street Research.
Tsingda is in the Final Stages of an IPO
Tsingda Education recently filed an updated S-1 filing with the SEC, indicating that it intends to offer 8,079740 shares of common stock at an undisclosed date. The proposed maximum offering price has been set at $1.60 per share, while the company has approximately $30,878,777 in net assets that should create a book value of around $1.31 per share, as of September 30, 2010.
The company also revealed that it generated revenues of $14,650,863 in 2009, which represented a 101% increase from its 2008 revenues. Meanwhile, its net income was $7.1 million, or a 77.9% increase over its year-ago results. Finally, its six-month results are also tracking 20% high on the top-line and 41.4% higher on the bottom-line for the first half of 2010.
Looking at the Significant Value Ahead
With significant revenue growth and a strong book value, investors are eagerly looking forward to Tsingda Education’s initial public offering. And with a 10-20% equity stake that could be worth at least a couple million, EastBridge Investment Group’s (OTC-BB: EBIG) shareholders are also looking forward to seeing significant value being unlocked in their holdings.
Investors looking to capitalize on this initial public offering may therefore want to consider purchasing EastBridge’s stock, which trades with a market capitalization of just $7.84 million, despite having eight other high-growth Asian IPO candidates in its pipeline!
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