JRJC Notes:

IBD Article 9/27/07

• Model has changed from advertising sales to subscription revenue

• Advertising revenue up 60% last quarter but management guiding this to be flat

• In Q1 the number of China investment accounts was up 36% after years of sow growth

• Only 0.5% of registered users paying for more advanced financial analytical tools

  • Hiring telemarketers to upsell users

• Signed $3m dollar deal to buy Hong Kong brokerage

• New management attempting to turn $7.3m registered users into paying subscribers

  • Transitioning from advertising revenue to subscription revenue

  • Subscriptions accounted for 81% of revenue in Q2

• July 2005 Jun Ning resigned and Zhiwei Zhao was recruited as CEO

• Analysts guiding 90 cents in 2008 (up to 96 cents now 4/28/08)

EPS Release and Conf call 2/29/08 for Q4

• Guiding net revenue for 2008 to $54-61 million, up from previous range of $50-60m

• Guiding non-GAAP net income to $24-29 million up from $22-28 million

• Active paying retail subscribers 56,200 up 24% sequentially

• Net revenue 8.88m up 252% y/y and 22% sequentially

• Non GAAP EPS 0.16

• FY 2007 revenue of $25.9 million up 263% y/y and EPS 0.45

• Subscription fees paid by retail investors represented 87% of revenue for Q4

  • Another 3% from institutional subscription fees

  • Advertising revenues were only 5% of total

• Investment in Moloon – Mobile streaming media – was written down from 12.61m to 1.48m – should not have adverse affect on growth

• Strong cash balance of $74.7m made up of 51.1m in RM and 23.6m in other currencies

• 12/31 had 9.0m registered users up from 8.1m end of last Quarter

• Expects 10-10.5 million revenues in Q1

• Continuous enhancements in telemarketing capabilities and recent partnership with Shanghai stock exchange and China Telecom

• 2008 financial results will be back end loaded – China Telecom likely to ramp into second half

• No long-term debt, balance sheet looks healthy

• November 2007 successfully completed acquisition of Daily Growth Investment Company – licensed brokerage company

• End of 2007 there were 180 million stock trading accounts open in China

  • China law limits each individual to no more than 2 accounts

• Do not expect Daily Growth to make a sizable impact in first half