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+44 (0)20 7232 3090 Traded on

AIM, London
Fax +44 (0)20 7232 3099 Stock Exchange Regulated and

LSE: IIR authorised by

Focus Media Holding Limited 11 July 2008

Update Report – 1Q 08 Results

Earthquake in China to impact revenues by US$40 mn; guidance revised downwards

ADR BUY Fundamental research indicates a 68% upside in the ADR over the next 6-24 months. We have
calculatedaccess toprice
the target the based
full report free of
on fundamental charge
factors, usingat
weighted average of target prices

Fundamental Stock
obtained by using DCF and comparative valuation methodologies.

Ticker: FMCN
Target price: US$39.46 We reiterate the ADR (1 ADR = 5 common shares1) a BUY with a 6-24 month target price of
Current price: US$23.55 US$39.46 per share.

European BUY The European stock is expected to appreciate approximately 90% over the next 6-24 months.
Approximately 22.5 percentage points of this upside is attributable to the anticipated appreciation of
Stock2 the US dollar against the Euro over the same period.

Ticker: FMCNy.F
Target price: €29.23 We reiterate European stock (1 European stock = 5 common shares) a BUY with a 6-24 month target
Current price: €15.38 price of US$29.23 per share.

Supervisor: Meera Patil

Analyst: Sumit Jain Investment horizon – short term trading horizons
Editor: Shem Pennant This report addresses the needs of strategic investors with a long-term investment horizon of 6-24 months. If
Global Research Director: this report is provided to you by your broker under the Global Settlement, you may now also access (free of
Satish Betadpur, CFA charge) the short-term trading outlook that we publish from time to time for this issuer, looking at the coming
5-30 days for readers with a shorter trading horizon. These are available on-line only at
Next news due:
2Q 08 results, August 2008
Report summary
Focus Media Holding Limited (FMCN) announced its 1Q 08 results on 05 June 2008. While 1Q 08
revenues were above our estimate driven by healthy growth across segments, adjusted2 net income
fell beneath our expectations due to a higher than expected tax rate. FMCN has lowered its FY 08
revenue guidance by US$40 mn and profits by US$20 mn taking into consideration the impact of the
recent earthquake in Sichuan province, China. Due to the downward revision in estimates coupled with
the weakness witnessed in global bourses over the past few months, the FMCN ADR has witnessed a
significant decline since our previous update report. However, based on favorable market conditions
for electronic advertising in China coupled with major upcoming events such as the Beijing Olympics in
FY 2008 and Shanghai World Expo in FY 2010, we expect FMCN to continue to witness healthy
revenue growth. As a result we view the FMCN ADR an attractive investment opportunity at current

Currency impact for US investors

The company reports in US dollars, which is its major trading currency. Earnings forecasts are
therefore also expressed in US dollars. Although the company has costs as well as revenues in other
currencies, we assume that the net risk is minimized through effective hedging strategies. As a result,
the impact of currency movements on the price of the ADR is assumed to be neutral. Where specific
currency risks are identified these will be highlighted in the report.

Currency impact on the European stock

The impact by itself of the anticipated currency movements on the European stock (now €15.38),
without considering changes in the share price, is broadly positive and is expected to be:

Over 6 months: €14.02

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