China Bilingual Technology & Education Group, Inc.

(OTCBB: CBLY)

FINANCIAL INFO VALUE PROPOSITION

Current Price $3.99 As China experiences rapid industrialization and rising living standards,
education spending has taken off and is expected to make up 4% of GDP by
Market Cap $119.7M
2012. Parents in China’s new middle and upper classes are sending their
Shares Outstanding 30.0M children to receive high-quality education at private boarding schools like
Float 3.0M those operated by CBLY.
52-Week Range $2.75—$4.40 CBLY has grown revenues and earnings at 25% annually and will continue
to expand as education spending increases. 2009 earnings were $10.1M,
Insider Ownership 90.0%
and net income is already $9.9M for the first 9 months of 2010. Comparable
Revenue (ttm) $24.2M U.S.-listed Chinese peers trade at exceptionally high earnings multiples,
Gross Profit (ttm) $14.9M some in excess of 50x. This stock could trade at a 25-30x P/E, which would
give it a price per share in the $10.50-$12.60 range, a potential return of
Net Income (ttm) $12.5M roughly 216%.
EPS (ttm) $0.42 INVESTMENT HIGHLIGHTS
Net Margin (ttm) 51.8% • Education is China’s third largest consumer spending category after food
Cash (mrq) $14.1M and housing at 11% of total consumer spending.
P/S (ttm) 4.9x • In its medium and long-term education reform outline (2010-2020), the
Chinese government has set a target for spending in the education sector
P/E (ttm) 9.5x
to reach 4% of GDP in 2012, up from 2.8% in 2004 and 3.3% in 2008.
P/B (mrq) 3.7x
• China Bilingual plans to grow by expanding its current model and teaching
Operating Margin (ttm) 51.9% methods into new schools and by branching out from basic education into
Debt/Equity (mrq) 72.5% training services and international exchange programs.
•
Fiscal Year End 31-Dec. FINANCIAL HIGHLIGHTS
As of November 17, 2010
20%
China Bilingual Technology
& Education Group, Inc.
No. 2 Longbao Street, Xiaodian Zone,
Taiyuan City, Shanxi Province, China
030031 33%
Phone: 86.351.796.3988

Auditors:
Windes & McClaughry Accountancy Corp.

Legal Counsel:
Sichenzia Ross Friedman Ference LLP

COMPANY OVERVIEW
China Bilingual Technology and Education Group, Inc. is a fast-growing
RedChip Companies, Inc. education company in China that currently operates two private schools
500 Winderley Place, Suite 100 encompassing the kindergarten, elementary, middle, and high school levels,
Maitland, FL 32751
with a total of over 9,000 students and 1,300 staff members.
Jon Cunningham The Company’s Shanxi Modern Bilingual School was established in 1998, is
www.RedChip.com housed on a 133,000 square-meter campus, and provides students with an
Ph: 800-RED-CHIP (733-2447) Ext.107 innovative and high-quality education with a focus on fluency in both
407-644-4256 Chinese and English.

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 China Bilingual Technology & Education Group, Inc.
(OTCBB: CBLY)

OVERVIEW (cont’d.)

The Company opened its first school in 1998 and established its Sichuan
Guang’an Experimental High School in 2002 as a high-profile, high-
standards, full-time boarding school. With a 70,000 square-meter, state-of-
the-art campus, 160 full-time teachers, and a focus on small classes and
teaching excellence, the school regularly ranks among the top schools in
its region for college entrance rates and national college entrance exam
scores. In 2009, it had the highest college entrance rate in Huaying City.

CHINESE EDUCATION MARKET

Spending on education in China is booming as the nation’s standard of

living rises and parents try to give their children an advantage in China’s
increasingly competitive workforce. Education is the third largest
consumer spending in category and makes up 11% of China’s GDP.
Education expenditures as a percentage of China’s GDP have risen from
2.8% in 2004 to 3.3% in 2008, and the central government of the PRC has
set a target of 4% by 2012.

The Chinese education industry is highly competitive. Competition among

educational institutions is primarily driven by: Sources: Global Education Digest, UNESCO Institute for Statis-
• Location tics 2007; China’s Ministry of Education, National Bureau of
Statistics of China
• Courses
• Research capability
• Reputation

Competition between Chinese educational institutions has intensified in recent years due to the increase in private
educational institutions and extra-curricular training centers that allow students to choose the educational
institutions and courses they would like to attend.

In general, educational institutions compete within the

communities they serve based on the teaching quality and
specialty of the teachers, enrollment rate, reputation, the
physical condition of their facilities and teaching
equipment. China Bilingual strives to distinguish the
educational institutions it operates based on the quality
provided and its ability to attract and retain teachers with
varied specialties. The Company strives to maintain and
improve the level of enrollment and to provide quality
facilities and teaching services.

The Company faces competition from domestic and international education services providers that are seeking to
acquire and operate educational institutions in China. The Company expects competition for attractive
opportunities to intensify because of the continued privatization of the education industry in China and the difficulty
in setting up new educational institutions in China, which requires approval from the local Bureau of Education or
the Ministry of Education of China. Other competitors, such as high-end standalone private educational institutions
and training centers that cater to high-income consumers and foreign expatriates, have emerged primarily as a
result of the increasing affluence of the Chinese population.

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 China Bilingual Technology & Education Group, Inc.
(OTCBB: CBLY)

FACILITIES
Shanxi Modern Bilingual School encompasses kindergarten through high school in one full-time boarding school. The
elegant school environment covers 133,000 square meters. The school has three academic buildings, an administration
building, four apartment buildings, two cafeterias, six teacher residential building, a multifunctional arts gymnasium, three
high-standard epoxy polyurethane plastic 400-meter circular tracks, 3 standard basketball courts, and a children’s
playground. The school is equipped with:

• audio-visual language teaching facilities

• multimedia amphitheater
• modern computer classrooms (which allow for remote teaching)
• physics, chemistry, and biology laboratories
• library
• reading, art, and music rooms

Sichuan Guang’an Experimental High School is a private, high-profile, high standard, full-time high school. The school
environment is beautiful and tree-lined, with state-of-the-art hardware and a unique architectural style. The campus covers
an area of 70,000 square meters. It has two teaching buildings, four teacher apartments, four student apartment buildings,
two cafeterias, a complex building, an audio-visual technology building, and a large-scale indoor sports center. Recent
campus improvement projects costing $300,000 involved the planting of planted trees, shrubs and banyan to improve the
school’s life environment. All school equipment meets provincial-level high school standards. The school is equipped with:

• modern art rooms

• science and language labs
• multimedia network classroom
• high-specification amphitheater
• music, dance, and piano rooms
• 400-meter circular track and field, basketball, volleyball, and badminton courts

MANAGEMENT TEAM
Ren Zhiqing, Chairman and CEO
Mr. Ren has been the Chief Executive Officer of Shanxi Taiji Industrial Development Co., Ltd. since its formation in 1997.
Previously, he was the president of Shanxi Modern Trade and Economics Institute(1993 to 1997). Head of China Yinjing
News Agent Shanxi Branch (1989 to 1993). Reporter of China Economic News Agency (1986 to 1989). Mr. Ren earned
his Bachelors degree at Shanxi College of Traditional Chinese Medicine.

Michael Toups, Chief Financial Officer

Mr. Toups has over 20 years of experience in senior business management and specialties in business strategy, M&A and
international trade. He has middle-market corporate finance experience across a variety of industries as both principal and
advisor and has served as the COO, CFO, and Director of publicly traded companies. Mr. Toups is also well-versed in
Chinese business practices and has directed strategic business planning for Asia-based companies. Mr. Toups holds an
MBA in Finance from the University of Notre Dame and a BBA in Finance from Texas Christian University.

Pan Mingxiao , Executive Vice President and Director

Mr. Pan has been an officer and director of Shanxi Taiji Industrial Development Co., Ltd since 2004. Previously, he was
the Chief Financial Officer of Shanxi Modern Bilingual School. Mr. Pan earned his Bachelors degree from Peking
University.

Zhao Hegui, Executive Vice President and Director

Mr. Zhao has been an officer and director of Shanxi Taiji Industrial Development Co., Ltd since 2009. Previously, he was
the Head of Shanxi Modern Bilingual School (2004 to 2009) and Managing President of Shanxi Modern Bilingual School
(2003 to 2004). Mr. Zhao earned his Bachelors in Shanxi Education Institute.

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 China Bilingual Technology & Education Group, Inc.
(OTCBB: CBLY)

PUBLIC COMPARABLES
Symbol Price 52-Week 52-Week 30-Day 180-Day 52-Week
11/17/10 High Low Change Change Change

CBLY $3.99 $4.40 $2.75 31.3% N/A N/A

CAST $7.70 $8.55 $5.50 2.5% 11.9% -1.9%
DL $5.05 $7.19 $3.04 -5.0% -2.3% -27.3%
EDU $105.75 $116.29 $66.30 15.5% 16.4% 48.7%
CEDU $7.22 $8.40 $6.20 5.0% 3.8% -6.4%

Symbol Revenues Revenue Market Cap Float % Held by Shares

(ttm) Per Share Insiders Outstanding
CBLY $24.2M $0.81 $119.7M 3.0M 90.0% 30.0M
CAST $173.4M $3.60 $384.8M 42.8M 8.1% 49.8M

DL $34.7M $0.50 $175.5M N/A N/A 34.5M

EDU $429.3M $11.27 $4.1B N/A N/A 37.7M
CEDU $372.M $23.12 $119.8M N/A N/A 16.3M

Symbol EPS (ttm) P/E (ttm) Prices to Sales Institutional Company Name
(ttm) Ownership
CBLY $0.42 9.5x 4.9x N/A China Bilingual Technology & Education
CAST $0.97 8.01x 2.1x 56.4% ChinaCast Education Corp
DL $0.01 636.3x 10.2x N/A China Distance Education Holdings Ltd
EDU $2.15 50.5x 9.6x N/A New Oriental Education & Technology
CEDU $2.12 23.0x 2.1x N/A ChinaEdu Corp
Data provided by Bloomberg.

Disclosure
None of the profiles issued by RedChip Companies, Inc., constitutes a recommendation for any investor to purchase or sell any particular security or that any
security is suitable for any investor. Any investor should determine whether a particular security is suitable based on the investor’s objectives, other securities
holdings, financial situation needs, and tax status. RedChip Companies, Inc., employees and affiliates may have positions and affect transactions in the secu-
rities or options of the issuers mentioned herein. All materials are subject to change without notice. Information is obtained from sources believed to be reli-
able, but its accuracy and completeness are not guaranteed. China Bilingual Technology & Education Group Inc. (“CBLY”) is a client of RedChip Companies,
Inc. and of RedChip Visibility, a division of RedChip Companies. CBLY paid RedChip Visibility, a division of RedChip Companies, Inc., $30,000 for twelve
(12) months of RedChip Visibility Program services, which included the preparation of the equity research report(s). The equity research report(s) were pre-
pared for informational purposes only and were paid for by the company portrayed in the report. Information contained in the equity research report(s) is ob-
tained from sources believed to be reliable, but its accuracy and completeness are not guaranteed. The equity research report(s) are not a recommendation
of a solicitation to purchase or sell any security, nor do they constitute investment advice. RedChip Companies, Inc., is currently engaged by this company to
provide investor awareness services. Investor awareness services and programs are designed to help small-cap companies communicate their investment
characteristics. CBLY agreed to pay RedChip Companies, Inc., a fee of $20,000 in cash per month for the first six (6) months of these investor relations ser-
vices, and thereafter, $10,000 in cash per month for the next six (6) months of these investor relations services. In addition, the Company has agreed to pay
RedChip Companies, Inc., 200,000 shares of Rule 144 stock when the company becomes listed on the Nasdaq Capital Market, and an additional 50,000
shares of Rule 144 stock when CBLY’s stock price reaches $5.00 for 45 days. RedChip Companies, Inc., employees and affiliates may have positions and
affect transactions in the securities or options of the issuers mentioned herein.

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