CHND China Media Inc (CE)

Dutton Associates updates its coverage of China Direct (OTCBB:CHND) maintaining a Strong Speculative Buy rating and a higher $8.04 price target. The 14-page report by Dutton senior analyst Stanley Ng is available at www.jmdutton.com as well as from First Call, Bloomberg, Zacks, Reuters, Knobias, and other leading financial portals. China Direct recently announced its financial results for the 2Q and first-half ended June 30, 2007. Total revenue of $71.4 million for the first half represented 53% of our full year estimate in our initial report released in mid May, while net income of $4.1 million exceeded our initial forecast by more than 40%. China Direct Consulting and Chang Magnesium were the two star-performers and profit centers, providing the major surprises on the upside in the first half of 2007. Meanwhile, the quarter-on-quarter 30.8% increase in revenue and 21.2% rise in net income in the second quarter reflected management�s successful execution of China Direct�s business model by implementing Western style management to increase sales and improve operating efficiency of the newly acquired operating subsidiaries. As a result of the stronger-than-expected financial results in the first half of 2007 and the current outlook for the remainder of the year, management has further raised its financial guidance of revenue in excess of $150 million from the previous estimate of $120 million. Based on six months results, we are prompted to aggressively upgrade our overall revenue and net income forecasts for both 2007 and 2008 with diluted EPS forecast at $0.47 in 2007, rising 42.6% to $0.67 in 2008. We have substantially upgraded our 12-month price target from $5.52 to $8.04. About Dutton Associates Dutton Associates is one of the largest investment research firms in the U.S. Its 31 senior analysts are primarily CFAs, and have expertise in many industries. Dutton Associates provides continuing analyst coverage of over 140 enrolled companies, and its research, estimates, and ratings are carried in all the major databases serving institutions and online investors. The cost of enrollment in our one-year continuing research program is US $35,000 prepaid for 4 Research Reports, typically published quarterly, and requisite Research Notes. Dutton Associates received $35,000 from the Company for 4 Research Reports with coverage commencing on 5/15/2007. We do not accept payment of our fees in company stock. Our principals and analysts are prohibited from owning or trading in securities of covered companies. The views expressed in this research report accurately reflect the analyst's personal views about the subject securities or issuer. Neither the analyst's compensation nor the compensation received by us is in any way related to the specific ratings or views contained in this research report or note. Please read full disclosures and analyst background at www.jmdutton.com before investing.