Wednesday, 26 November 2014 17:45

China Nepstar (NPD) Q3 FY2014 Results

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China Nepstar Chain Drugstore (NPD; profile) released Q3 FY2014 results which included revenue growth of +8% YoY, driven by strong comparable store sales acceleration vs. last quarter. Despite progress on growing the top line, the company reported another quarter of net losses due to gross margins pushed lower by promotion spending.   Another quarter of losses is disappointing, but management’s outlook may be cause for some near-term optimism. The company expected to see some results from earlier efforts at growing its customer base in Q4, a seasonally strong quarter, through stronger sales of pharmaceutical and nutritional products. Looking further ahead,…
Wednesday, 26 November 2014 17:33

KongZhong (KZ) Q3 FY2014 Results

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KongZhong (KZ; profile) released Q3 FY2014 results that included revenue of 59.6 million USD (missing management’s earlier guidance of 64-65 million USD) and net income of 3.5 million USD (also missing management’s earlier guidance of 9-10 million USD). Ignoring one-time items, net income swung to a profit of about 9.8 million USD (Non-GAAP, EPADS of 0.17 USD), vs. losses in Q2 and a year ago. Results were disappointing, with revenue lower on softer-than-expected results in Internet games and unplanned delays in the mobile pipeline, but there were positives in the form of margin improvements under the circumstances. On the Q3…
Monday, 24 November 2014 04:58

Week in review - Nov 21, 2014

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The big news this week for China was undoubtedly the surprise rate cut from the central bank, which lowered one-year lending rates to 5.6% vs. 6% previously, in a bid to support a clearly struggling economy. The move came after the latest economic indicator, the HSBC/Markit Flash China Manufacturing, pointed to ongoing pricing pressure as well as a struggling employment situation. (It may be helpful to note that the data is just an estimate, so it could be revised in the coming weeks, but historically the adjustment has been minimal, about 0.1-0.2.) It was tough to find a silver lining…
Thursday, 20 November 2014 12:41

Eco data - November Flash PMI sinks to 50.0

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The November 2014 HSBC Flash China manufacturing PMI came in at 50, on the dividing line between expansion (over 50) and contraction (under 50). The reading was less than the expected 50.3, and was a six month low. Key sub-indexes were mixed. The output index dropped to 49.5 vs. 50.7 in October, led by extended easing of export growth. New orders showed expansion at a faster pace, and employment showed contraction at a faster rate MoM. Both input and output prices showed signs of contraction, signaling deflation, however both readings weren’t as severe as last month. In prepared remarks, Hongbin…
Wednesday, 19 November 2014 21:09

LightInTheBox (LITB) Q3 FY2014 Results

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LightInTheBox (LITB; company profile here) released Q3 FY2014 results including revenue of 99.0 million USD (higher than with management’s earlier guidance) and a net loss of -6.3 million USD. Third quarter results beat consensus revenue expectations (99.0 vs. 94.4 million USD est.) and met on earnings (-0.09 USD per share). Success in the company’s apparel business was a key driver of top-line results (up over 100% YoY), and a higher contribution from repeat customers and mobile-based sales showed solid progress. Operating metrics also showed signs of improvement. The number of customers increased to 1.9 million (+46% YoY vs. 42% last…
Wednesday, 19 November 2014 01:55

Eco data - Residential home prices for October 2014

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Official statistics for China’s October home prices showed that prices for new and used homes continued to slide during the month. On average, new home prices were -2.5% lower YoY in October (vs. -1.1% in September), and existing home prices were lower approximately -2.5% YoY vs. -1.1% in September. The rate of change MoM improved slightly in October, with new home prices dropping -0.8% on average during the month (vs. -1.0% in September), the same for existing home prices. With prices sliding lower MoM for the last few months, it shouldn’t come as a shock that on a YoY basis,…
Monday, 17 November 2014 17:45

Hollysys (HOLI) Q1 FY2015 Results

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HollySys Automation Technologies (HOLI; detailed profile) released Q1 FY2015 results beating consensus both on the top and bottom lines (revenue 141 million USD vs. 125 est.; EPS of 0.46 USD vs. 0.38 est.). Continued strength in the Rail transportation segment (+12% YoY) helped push up revenue, as did Mechanical and Electrical Solutions (nearly +200% YoY), which offset slight weakness in Industrial automation (revenues -2% YoY). Resilient gross margins in both the integrated contract business and product sales helped push the total gross profit margin to a multi-year high of 38%, which combined with controlling fixed expenses resulted operating margin improvement…
Sunday, 16 November 2014 22:59

Week in review – Nov 14, 2014

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China stocks traded in the US this week managed to close higher for the week, surprising after the big eco data release for October (industrial production, fixed assets, retail sales) had investors selling everything but the kitchen sink on Thursday. This week’s higher close marks the resumption of an upward trend which started in mid-October, and by Friday, the Powershares Golden China ETF (PGJ) was sitting on a 4.4% gain YTD, after being up as much as 14%, twice. The stock have not been a stranger to volatility. A major factor behind fluctuations this year have been mostly macro –…
Friday, 14 November 2014 20:43

Youku Tudou (YOKU) Q3 FY2014 Results

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Youku Tudou (YOKU; detail on the company here) released Q3 FY2014 results which included revenue of 1.1 billion RMB (meeting management’s earlier guidance and consensus expectations) and a net loss of 181 million RMB, missing consensus estimates. The company made progress expanding its audience, as shown by strong traffic growth YoY, but remained relatively weak in monetization, impacting margins while the company stepped up investments in headcount and content. Although financial results were somewhat soft during Q3, positives during the quarter included progress in the company’s relationship with Alibaba, as well as content library expansion, key areas which could pave…
Friday, 14 November 2014 16:29

Sina (SINA) Q3 FY2014 Results

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Sina Corporation (SINA; company profile) released Q3 FY2014 results which beat consensus estimates for both revenue and earnings. During the third quarter, Weibo was again a main factor, delivering revenue grow of +58% YoY, and helped improve margins of the advertising business, leading to a sequential operating margin recovery. The core portal business continued to show signs of strain, negatively impacted by waning advertiser demand and overall macroeconomic pressure. Boosting the bottom line results were one-time gains including those from the Alibaba IPO and other investment holdings. In terms of looking forward, management emphasized that its “verticalization strategy” (converting portal…
Thursday, 13 November 2014 20:02

China Lodging (HTHT) Q3 FY2014 Results

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China Lodging Group (HTHT; company profile) released Q3 FY2014 results which included revenue meeting both analysts’ expectations and earlier company guidance, and EPADS of 2.36 RMB (0.43 USD per share, edging out the 0.38 USD EPADS expected). Factors behind the earnings beat were improvements in hotel cost control as well as an increased contribution from high-margin manachised hotel revenue. Net margins improved for the third consecutive quarter, helped by organic growth of the hotel network, but also from the strategy of growing through adding manachised hotels, which have no capex and negligible direct operating costs. Although the company delivered respectable…
The National Bureau Statistics released the monthly reading of Industrial production, Fixed asset investment, and Retail sales for October, which were all lower MoM, in the latest sign that China’s economy is continuing to slow. Industrial production came in at +7.7%, off slightly from last month’s +8.0% pace and higher than 2014 low in August (+6.9%), however still missed the consensus estimate of +8.0% growth. Retail sales were another key index that showed unexpected weakness. Official data showed that retail sales grew +11.5% YoY, slightly under the +11.6% pace that analysts were expecting. Real estate development continued to sag, dropping…
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