The Big Bounce For Chinese Internet Stocks (24/7 Wall St)

7 August 2012 12 h 56 min Comments Off

Three of China’s bigger Internet players reported earnings this morning, and the results are lifting virtually all of the country’s Internet stocks. The leader is Sohu.com Inc. (NASDAQ: SOHU), up about 18%, followed by Changyou.com Ltd. (NASDAQ: CYOU), up nearly 16%, and Youku Inc. (NYSE: YOKU), up about 8%.

These stocks, along with shares in Baidu Inc. (NASDAQ: BIDU), SINA Corp. (NASDAQ: SINA), E-commerce China Dangdang Inc. (NYSE: DANG), and Renren Inc. (NYSE: RENN) all trade lower than they did a year ago by anywhere from -7% (Baidu) to -50% (Changyou.com). Only Tudou Holdings Ltd. (NASDAQ: TUDO) is trading higher and that’s due to the company’s coming acquisition by Youku.

What’s happening is that growth has stalled as costs have mounted and the growth of the overall Chinese economy has also weakened.

More than 550 million Chinese have Internet access, but user growth rates have fallen from more than 50% to around 10%-12%.

. While Sohu.com, a media and gaming company, handily beat consensus estimates for both EPS and revenues, gross margins fell in nearly every area of the business. Total gross margin for the quarter fell from 65% last quarter and 73% in the same-period a year ago to 61% this quarter. Online advertising gross margins fell from 40% last quarter and 60% a year ago to 31% this quarter. Operating expenses at Sohu.com rose 49% year-over-year and 19% sequentially. Operating profit fell -37% year-over-year and -17% sequentially. Operating margins also fell to 17% in the quarter, from 35% a year ago and 23% last quarter.

. At Youku, China’s YouTube, revenues jumped 96%, but so did operating expenses. In every expense category, expenses rose by at least 50% and in some categories expenses doubled or worse. Youku was able to increase its number of advertisers and to increase their average spending.

. Changyou, an online game developer and operator that is 67%-owned by Sohu.com, is rewarding shareholders with a special dividend of $3.80 per ADS, which accounts for today’s big share price jump. Like the others, Changyou is seeing expenses rise and cutting into margins. Changyou also plans to spin-off its 7Road.com Ltd. subsidiary, providing another booster for the stock today.

. Renren, which reports earnings tomorrow, is up more than 11% today. The social networking platform is expected to post an EPS loss of -$0.04 on $42.2 million in revenue, but the relatively good performance of Sohu.com and the others today are raising hopes. Shares are up nearly 11% at $4.17 in a 52-week range of $3.21-$8.50.

. Dangdang reports earnings next week, and the consensus estimate calls for an EPS loss of $0.23 on $186.4 million in revenues. Shares are up 9% at $ 5.47 in a 52-week range of $4.11-$11.25.

. Sina also reports next week and the consensus estimates call for an EPS loss of $0.02 on $127.3 million in revenues. Shares are trading today up more than 10% at $49.12 in a 52-week range of $43.12-$114.89.

. Baidu, which reported earnings in late July, is up nearly 4% at $129.68 in a 52-week range of $99.71-$154.15. Estimates for the current quarter call for EPS of $1.28 on revenues of $993.4 billion.

Sohu.com’s shares are now up 18% at $40.94 in a 52-week range of $33.75-$84.00.
Changyou’s shares are up about 15.5% at $22.36 in a 52-week range of $17.00-$43.64.
Youku’s shares are up more than 8% at $17.70 in a 52-week range of $13.76-$32.75.

Source: 24/7 Wall St (06/08/2012)

Related posts:

Comments are closed

Other News

  • China (mainland) film Brilliant future expected for Chinese cinema: interview

    Brilliant future expected for Chinese cinema: interview

    Jiang Wen (R), a well-known Chinese director, walks down the red carpet with his wife Zhou Yun at the opening ceremony of the 70th Venice Film Festival in Venice, Italy, Aug 29, 2013. [Photo / Xinhua] (Xinhua, 04 Sep, 2013)Chinese films have achieved over the past few years very positive results in terms of both quantity and quality, and will drive their technology-led development, 70th Venice Film Festival president Alberto Barbera told Xinhua in a recent exclusive interview. This venerable [...]

    Read more →
  • Breaking news China (mainland) film Cloudary extends script to movie industry

    Cloudary extends script to movie industry

    (chinadaily.com.cn, 26 Aug, 2013) Cloudary Corp – an online literature platform owned by interactive media giant Shanda Group – said on Friday that it reached a film script agreement with the Chinese movie firm Seven Stars Films. Seven Stars Films, a movie production and investment firm owned by Chinese media entrepreneu r Bruno Wu, will link Cloudary’s literature with the world’s movie industry. Wu, who is married to popular TV host Yang Lan, founded Seven Star Films in 2012. The [...]

    Read more →
  • Breaking news China (mainland) film China’s movie market booms with local content

    China’s movie market booms with local content

    ( Agencies, 23 Aug, 2013) In “American Dreams in China”, Cheng Dongqing is giving a lecture in an abandoned factory in Beijing . Snow falls through the damaged roof and a power cut sends students reaching for their flashlights. The movie , about how young Chinese in the 1990s tried every means to learn English so they could study overseas, is part of a boom in domestic productions that is outpacing foreign film s at the box office in China. [...]

    Read more →
  • Breaking news China (mainland) film Fast forward with film

    Fast forward with film

    (China Daily, 23 Aug, 2013) In the past year, Chinese films have galloped ahead like a dark horse, beating Hollywood imports. It is hardly surprising that most of these domestic hits are comedies. Comedy is mostly local. When Hollywood sent scouts to recover the secret formula, many of them reported that these Chinese movies were not particularly funny. Of course not. When you translate every line into English, you have lost much of the fun, leaving only a few sight [...]

    Read more →
  • Breaking news China (mainland) Digital Mobile game firms looking abroad

    Mobile game firms looking abroad

    (China Daily, 21 Aug, 2013) Intensifying domestic competition is driving Chinese mobile game developers into overseas markets, said Google Inc, owner of the world’s most used smartphone operating system. Japan and South Korea may become “sizeable” money-spinners for developers in China in the coming years, it added. “Tapping into South Korea and Japan makes sense for Chinese developers, because both countries have a large smartphone user base and high sales volume in the mobile gaming sector,” said Ben Zhang, China [...]

    Read more →
  • Breaking news China (mainland) tv PPTV denies buyout rumors

    PPTV denies buyout rumors

    (chinadaily.com.cn, 14 Aug, 2013) Online video provider PPTV has denied rumors it will be jointly acquired by e-commerce giant Alibaba Group Holding Ltd and Hunan Satellite TV. “We have noticed related media reports. PPTV is operating independently, well, and we have nothing to announce at present,” PPTV told China Daily on Wednesday. A report from IT industry portal 36kr.com said on Wednesday that the prospective deal is almost closed, with the transaction reaching $400 million. It cited venture capital sources [...]

    Read more →
  • Breaking news China (mainland) film Film industry needs long tail to grow

    Film industry needs long tail to grow

    (China Daily, 15 Aug, 2013) The domestic film market registered record half-yearly box office returns of 10.9 billion yuan ($1.77 billion) in the first six months of this year, up 35 percent year-on-year, and there have been excited voices saying that the Chinese film industry is about to boom in the international market. However, box office success is just part of the industry’s chain, and without the further development of licensed movie merchandising, the Chinese film industry is still in [...]

    Read more →
  • Breaking news China (mainland) Digital New WeChat game becoming painfully popular

    New WeChat game becoming painfully popular

    (chinadaily.com.cn, 15 Aug, 2013) A new mobile phone game on WeChat, a social network app in China, is proving so popular that it’s causing hand injuries for many Chinese users. The game, which was recently introduced to WeChat’s 400 million subscribers, allows users to compete online with their friends in aircraft battles. Within two hours after the release of the game on Aug 5, there were more than 180 million downloads. But Zou Cheng, an orthopedic doctor at Hangzhou First [...]

    Read more →