DALLAS, TX--(Marketwire - December 28, 2009) - China Crescent Enterprises, Inc. (
OTCBB:
CCTR)
today released a letter to shareholders from board member and founder
Philip Verges. The letter reviews 2009 challenges and successes and
previews the evolving strategy for 2010 to be presented at the upcoming
Virtual Town Hall scheduled for January 22, 2010. The Virtual Town Hall
agenda includes a presentation on management's plan to reach for $100
million in revenue in 2010. The letter to shareholders announced today is
included in its entirety below.
Dear Shareholders -
The global economy certainly presented some challenges this year. At the
same time, the worldwide financial crisis also created new opportunities.
In all, I believe we have absorbed the challenges well and seized
opportunities where presented. As the year draws to a close, I wanted to
take a moment to review highlights of both our challenges and
opportunities. Management is internally reviewing the 2009 challenges and
opportunities as we tune our strategy for 2010. Within the upcoming
Virtual Town Hall scheduled for January 22, 2010, we plan to present our
strategy updates resulting from our internal review of the 2009 challenges
and opportunities. We expect the plan we present on January 22nd to
include some substantial changes. At this moment, I anticipate
shareholders and interested investors are reviewing their investment
strategies as we review our growth strategies, and in that regard I hope
this letter today may contribute to the consideration of your 2010
investment strategy.
China Crescent is part of a comprehensive agenda to build a global emerging
market technology service capability. Since the initiation of that agenda
in 1997, the agenda has expanded to include addressing the challenges of
the start-up, early stage and small business capital markets. China
Crescent has evolved from a business founded by my family with the help of
an angel investor. China Crescent remains part of the NewMarket
Technology, Inc. family of companies today. The upcoming Virtual Town
Hall will include all of the NewMarket family of companies. A growing and
recurring theme to be included in the Town Hall presentations entails the
increasing initiative stemming from the NewMarket experience to improve the
small business investment markets for both entrepreneurs and investors. We
believe this initiative is important to the NewMarket family of companies.
We also want to make a contribution to improving the overall global small
business opportunity for all entrepreneurs and investors. Again, tune
into our January 22nd Virtual Town Hall to learn more. You can find a
preview of Town Hall topics in a recent letter to NewMarket shareholders
here:
http://www.marketwire.com/press-release/Newmarket-Technology-Inc-1095836.html.
Sales Rebound from Financial Crisis and Stand to Get Better with Improved
Margin Potential
China Crescent's return on investment potential depends on the Company's
long-term operational success. China Crescent has not only had to deal
with the ordinary start-up hurdles since its inception approximately three
years ago, but also with the extraordinary issues surrounding a global
financial crisis. After experiencing a sales slow down at the onset of
2009 that we attribute to the global financial crisis, we have seen sales
pick up to levels commensurate to last year before the financial crisis was
a prevalent factor. In spite of the global financial crisis, our net
income has been better this year than ever. I believe this is a result of
both long-term initiatives we have had underway to improve operating
margins and as a result of measures we took specifically in reaction to the
global financial crisis to bolster against the unexpected. We introduced
technology outsourcing services this year. As a result, we stand to
potentially realize more revenue in 2009 than in the previous years. Our
initial outsourcing services efforts could possibly make a meaningful
contribution to the fourth quarter revenue anticipated from our customary
customer contracts.
Improved Staying Power Bolstering Against Further Potential Economic
Fall-Out
In addition to measures driven by the global financial crisis to improve
margins, we have also worked to further bolster against the unexpected by
reducing debt. Earlier in 2009, we reduced the number of issued and
outstanding shares by executing a 1 for 25 reverse split. At the same
time, we increased the authorized. The reduction of issued and outstanding
and increase in authorized was intended in part to improve the Company's
capital structure and enhance the value of the stock as a resource for
reducing debt. We have since engaged in transactions to reduce debt that
resulted in the issue of stock and the corresponding increase of the issued
and outstanding. We have reduced the Company's debt and as such, I believe
improved the Company's staying power. While I hope we have seen the worst
of the possible impacts from the global financial crisis, I believe it is
prudent to remain vigilant against further possible unexpected
ramifications.
Milestone Return on Investment Potential
Those of you that have been tuned into China Crescent's shareholder
communications for more than a couple of weeks have probably heard us talk
about milestone investing. We are somewhat outspoken at China Crescent
about what we believe is an over-the-counter market wide disconnect between
operational performance and share price market values. We believe
over-the-counter share price values are determined more by qualitative
considerations than quantitative considerations. While national exchange
listed share prices frequently reflect business sector consistencies in
terms of book value and revenue correlations, over-the-counter share price
business sector consistencies and operational performance correlations are
hard to find. Share prices of over-the-counter companies often fluctuate
dramatically. We believe those fluctuations are driven by qualitative
reactions to milestone events. A new contract, for instance, announced by
an over-the-counter listed company may be received by the investment
community as an indication of the company's potential long-term success and
increased purchasing of that company's stock may ensue. The single
milestone will likely only sustain increased buying for a short period of
time and the share price will likely come back down again. Based on our
perception of the over-the-counter share price dynamics we frequently
discuss supplementing any long-term investment strategy with a milestone
investment strategy that entails buying small positions in anticipation of
milestone events and taking profits by selling when a milestone event
drives an increased share price. We anticipate China Crescent to have a
high potential of delivering milestone returns in addition to maintaining
long-term potential.
Long-Term Return on Investment Potential
Long-term return on investments from over-the-counter companies are a
higher risk proposition than return on investments in national
exchange-listed companies. The over-the-counter market has a high number
of early stage and start-up companies. Start-up companies frequently do
not achieve sustainable financial performance within three years. Many of
those companies that do not achieve sustainable financial performance will
deliver milestone successes along the way and be able to deliver milestone
returns. However, long-term success and a long-term return on investment
are more elusive. When an over-the-counter listed company achieves
sustainable financial performance and can potentially deliver a long-term
return on investment, that return is unlikely to be delivered by simple
long-term share price appreciation. It is difficult to predict how many
shares an over-the-counter company might issue in raising capital and
acquiring resources for its business plan. I believe most over-the-counter
companies end up issuing more stock than they anticipate. While a company
many reach financial sustainability, so many shares may have been issued
along the way that a sustainable share price reflecting financial
performance is unachievable in the over-the-counter markets. Accordingly,
the long-term return on investment may likely have to be delivered via some
other method. A sale of the operation to a larger company and a
corresponding distribution of the proceeds to the selling shareholders
could be one way a long-term return on investment is realized. As a
founder and director at China Crescent, I believe in the long-term
potential of the Company. However, we are fighting the statistics of early
stage companies that frequently do not achieve sustainable financial
performance. We are also an over-the-counter listed company and I am
telling you that I do not believe a long-term return on investment is
likely to be realized by simple share price appreciation in the
over-the-counter market. I furthermore do not have a definitive plan as to
what alternative means management intends to peruse in the delivery of a
long-term return. As 2010 approaches, I hope you will think about our
ongoing discussions on milestone investing and carefully consider your
long-term investment strategy.
Larger Sales Contracts and Higher Margins
After the first two years of getting our feet on the ground in China, we
have launched an effort this year to improve the quality of our offerings.
We have initiated a larger and more comprehensive technology service
offering. We are endeavoring to provide a total technology solution over a
three-year renewable period. We have had some notable initial success this
year and anticipate substantial revenue contributions in 2010. With our
first new service offering contract experiences, we anticipate more of the
same next year at an increased pace. In addition to improving our rate of
growth from organic sales, the new service offering also improves our
margin potential.
Business Line Diversification
In addition to repositioning our existing resources to introduce a new
service offering, we are also looking to diversify our overall business
line into multiple lines. Toward this diversification effort, we entered
into an acquisition agreement with China Radio Technology, Ltd.,
establishing a proprietary wireless technology business line. This new
business line will be maintained and developed as a subsidiary
organization. The delineation of the new business line as a separate
business will enable China Crescent a range of options in the future as to
how best to monetize our success in the new business line for shareholders
or otherwise protect shareholders from performance issues in the new
business line.
I hope the summary of what I consider to be major planning considerations
for 2010 has been helpful to your own investment considerations for next
year. I am bullish on China Crescent's potential and I expect you already
knew that. Thank you for your attention here to this communication today
and please look for further updates leading up to our town hall meeting in
January.
Thank you,
Philip Verges
Board Member
China Crescent Enterprises, Inc.
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About China Crescent Enterprises, Inc. (
www.chinacrescent.com)
China Crescent Enterprises, Inc. reported over $40 million in profitable
revenue in 2008. The Company is a technology leader in the rapidly
developing Chinese market specializing today in software engineering, high
quality software development and digital multimedia outsourcing services
delivered to customers globally. At the same time, the firm is a systems
integrator and value added reseller of major global hardware brands in the
Chinese domestic market.
Headquartered in Dallas with operations in Shanghai and Beijing, China
Crescent bridges the gap between Western and Eastern business cultures to
assist Western clients in realizing the advantages of the high quality, low
cost technology products and services available from China. China Crescent
also assists Western clients in localizing products and services to realize
the tremendous growth potential available by expanding into the Chinese
Market.
"SAFE HARBOR STATEMENT" UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995
This press release contains forward-looking statements that involve risks
and uncertainties. The statements in this release are forward-looking
statements that are made pursuant to safe harbor provision of the Private
Securities Litigation Reform Act of 1995. Actual results, events and
performance could vary materially from those contemplated by these
forward-looking statements. These statements involve known and unknown
risks and uncertainties, which may cause China Crescent's actual results in
future periods to differ materially from results expressed or implied by
forward-looking statements. These risks and uncertainties include, among
other things, product demand and market competition. You should
independently investigate and fully understand all risks before making
investment decisions.
Contact Information: Contact:
China Crescent Enterprises, Inc.
ir@chinacrescent.com
214-722-3060