Monday, 25 May 2015 00:00

Week in review - May 22, 2015

US-listed China stocks delivered more strong gains this week, with the PowerShares Golden Dragon China ETF rising +3.3% by Friday’s close. The move higher extended the recent rally’s total gains to about +27% from mid-March levels, and accounted for all of the YTD gains. The move higher from US-listed China stocks followed the lead from Mainland shares; the Shanghai composite push higher by about +8% on the week, closing at levels not seen since the 2008 global financial crisis. There was some eco-related news flow last week, and markets also had more earnings releases to digest. Eco data included home…
The official home price data for April showed an improvement in home prices for 70 major cities across China, for both new and existing homes. Looking at the data on a sequential basis (MoM), improving conditions seemed quite clear: for new homes, prices declined at the slowest rate since the correction began in May 2014, and prices for existing homes, prices rose for the first time since the downturn began last year. For major metropolitan areas (Beijing, Shanghai, Guangzhou, Shenzhen, Wuhan, Nanjing, Hangzhou, and Tianjin), the improvement was more clearly defined. For new homes in those top cities, prices rose…
China Nepstar (NPD, profile) announced a new CEO, Rebecca Zhang, who was previously the company’s COO (since late 2014). In the press release, the company highlighted Ms. Zhang’s background in procurement and merchandising in her various roles in these areas since joining Nepstar in 1999, not too dissimilar from outgoing CEO Fuxiang Zhang, who briefly held the COO post before assuming the CEO role in 2011. The timing of the announcement is interesting, during the quiet period prior to the Q1 FY2015 earnings release. Following Q4’s +14.2% comps growth, it seems that the market has been anticipating further strength in…
The HSBC/Markit Economics flash estimate of China’s manufacturing PMI for May came in at a tepid 49.1, up barely from 48.9 in April, and still indicating contracting conditions (the third month in a row). Major key sub-indexes pointed to ongoing weakness, however there was some moderation in degree versus last month (i.e. still falling, but at a less severe pace than April). New orders edged up slightly MoM but were still showing contraction, while New exports crossed over into contraction vs. expansion.  Employment conditions were still soft, as were Backlogs, but both were marginally higher MoM. Pricing pressure was still…
Friday, 22 May 2015 00:00

KongZhong (KZ) Q1 FY2015 Results

KongZhong (KZ, profile), delivered Q1 FY2015 results exceeding management’s expectations for both revenue and earnings. The top-line grew to 50.5 million USD in Q1 vs. management’s 46.5 million USD forecast, and delivered non-GAAP net income of 5.2 million USD vs. the 5.0 million USD estimate. Although the Q1 results did include revenue growth and margins beneath recent trends, KongZhong did proactively disclose underlying factors. When discussing why Q1 beat its estimates, management noted strength in WVAS (a strong cash cow for the company, not an active focus), and stronger-than-expected performance from World of Tanks. Management’s outlook for Q2 followed the…
Wednesday, 13 May 2015 00:00

51job Inc. (JOBS) crushed after soft Q1

After reporting Q1 FY2015 results, 51job Inc. (JOBS, profile) traded sharply lower on Tuesday, plunging a whopping -13.5% before the smoke cleared. The company’s Q1 results missed management’s own expectations (never a good sign), and it was a down day in the market, two factors which contributed to the sell-off, but in our opinion the real reason investors were hurdling toward the exits was provided on the conference call: weakening customer demand. Company management noted on the Q1 conference call that employer demand for online recruitment was softening, and more worryingly, faster than initially expected. As a result, 51jobs own…
China’s National Bureau of Statistics released its monthly reading of industrial production, fixed asset investment, retail sales, and investment in real estate development. The data painted a dim picture of China’s economy, reinforcing the view that growth headwinds were building. Industrial production edged up MoM (+5.9% YoY), missing estimates for a +6.0% pace, and every other indicator slid lower. Retail sales also undershot what the market was looking for, with April’s reading of +10% YoY well off the expected +10.5% pace. Shares in China were sharply lower after the news broke, an unusual move for a market that has been…
Tuesday, 12 May 2015 00:00

51job Inc. (JOBS) Q1 FY2015 Results

The first quarter FY2015 results for 51job Inc. (JOBS; profile) were mixed. Revenue of 458 million RMB fell short of management’s own guidance range of 460-480 million RMB, but non-GAAP EPS of 2.39 RMB exceeded its guidance range of 2.10 to 2.30 RMB. In prepared remarks, management noted that one reason for softer-than-expected revenue was the seasonal effect of Chinese New Year, which meant some business was pushed into the second quarter. Despite challenges on growing the top line, there was progress on business development. The total number of unique employers using the company’s online recruitment services grew to 287,914…
  Another one of our names that re-rated at bullish back in April while we were on the road. However, it also quickly violated the upper Bollinger band three of four days into the end of the month and has not done much since other than drift back out of…
The first day of the buy rating happened back on March 23rd having reached a new rating of 2 after the previous close.  That would have closed out the short position from 54.82 for a gain of only 2.5%. Since the bullish rating SOHU has run up 27%. The stock…
Monday, 11 May 2015 00:00

NetEase – bullish outlook

While we have been off planning for the institutional offering of China Stock Research with a broker in Hong Kong, we missed a few published changes in our technical coverage universe. With the April 1 open in bullish territory at 104.73, this would have closed out the short-lived bearish rating…
Sina’s rating turned bullish (rating popped from -0.5 to a 2.25 after an upper Bollinger violation and oversold condition were absorbed) back on the 13th of April and hasn’t looked back. The short call from December, if closed then would have been worth a measly 2.7%. Subscribers of real time…
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