3SOF

Yukii,

I hate to say this buddy but I think selling was a big mistake.
NTES beat the street by two cents and matched the high end of the earnings estimate.
The Revenues surpassed the High Estimates as well.
Lastly, the stock has been depressed for a long time. From Yahoo:
52-Week Change: -11.17%

I can see selling NTES if there was a huge run-up this year or before earnings.
This stock looks like prime pickins to me.

Quote from: wxmang on May 21, 2007, 08:31:03 PM
Yukii,

I hate to say this buddy but I think selling was a big mistake.
NTES beat the street by two cents and matched the high end of the earnings estimate.
The Revenues surpassed the High Estimates as well.
Lastly, the stock has been depressed for a long time. From Yahoo:
52-Week Change: -11.17%

I can see selling NTES if there was a huge run-up this year or before earnings.
This stock looks like prime pickins to me.

Not much to get excited to me about earnings pretty lame to me. Better places to put your money
look at TWIN  2005 $1.19  2006 $2.43 2007 $4.00 Now that is growth.
Wheres the growth not hope..  last 4 quarter for NTES .28 .29 .30 and now .29

Quote from: yukiii on May 21, 2007, 08:51:44 PM

Quote from: wxmang on May 21, 2007, 08:31:03 PM
Yukii,

I hate to say this buddy but I think selling was a big mistake.
NTES beat the street by two cents and matched the high end of the earnings estimate.
The Revenues surpassed the High Estimates as well.
Lastly, the stock has been depressed for a long time. From Yahoo:
52-Week Change: -11.17%

I can see selling NTES if there was a huge run-up this year or before earnings.
This stock looks like prime pickins to me.

Not much to get excited to me about earnings pretty lame to me. Better places to put your money
look at TWIN  2005 $1.19  2006 $2.43 2007 $4.00 Now that is growth.
Wheres the growth not hope..  last 4 quarter for NTES .28 .29 .30 and now .29

TWIN is no doubt a good company and will continue growing, but it is now up like 39% since announcing  March Q on April 24. If it were me, I would take profits on TWIN if you have any.

Quote from: BigSully1 on May 21, 2007, 11:26:50 PM

Quote from: yukiii on May 21, 2007, 08:51:44 PM

Quote from: wxmang on May 21, 2007, 08:31:03 PM
Yukii,

I hate to say this buddy but I think selling was a big mistake.
NTES beat the street by two cents and matched the high end of the earnings estimate.
The Revenues surpassed the High Estimates as well.
Lastly, the stock has been depressed for a long time. From Yahoo:
52-Week Change: -11.17%

I can see selling NTES if there was a huge run-up this year or before earnings.
This stock looks like prime pickins to me.

Not much to get excited to me about earnings pretty lame to me. Better places to put your money
look at TWIN  2005 $1.19  2006 $2.43 2007 $4.00 Now that is growth.
Wheres the growth not hope..  last 4 quarter for NTES .28 .29 .30 and now .29

TWIN is no doubt a good company and will continue growing, but it is now up like 39% since announcing  March Q on April 24. If it were me, I would take profits on TWIN if you have any.

Why take profits when its value is $100 and will split soon.

I can tell you this much, UpsideStocks has had it on their buy list since Dec 2005 at $21.58. They generally hold only small cap stocks for very long periods. Tuesday they issued a downgrade to sell, citing a big overall drop in their scoring system (only 53 out of 100) and said that it is now trading at the high end of it's historical valuation range. Others reasons for the drop in score weren't explained.

Quote from: BigSully1 on May 21, 2007, 11:55:33 PM
I can tell you this much, UpsideStocks has had it on their buy list since Dec 2005 at $21.58. They generally hold only small cap stocks for very long periods. Tuesday they issued a downgrade to sell, citing a big overall drop in their scoring system (only 53 out of 100) and said that it is now trading at the high end of it's historical valuation range. Others reasons for the drop in score weren't explained.

Well that really explains it, sell because someone says sell for no reason.
TWIN is trading at only 17x LTM EPS of $3.91 which is still too cheap for a company which is growing earnings 100%. The company has said that Q4 will be better than Q3 and that next FY will be even better than this fiscal year. 

As I expected, NTES beat the consensus estimates, both in terms of revenue and EPS. Analysts expected Q1 revenue to be $67.77 M, and it was $71.8 M. Analysts also expected EPS of $0.27 and it was $0.29.

The company is on track to make $1.2 EPS for the full year of 2007 (no sequential growth needed, just due to seasonality), and that means it is trading at 15.2 times forward earnings.

Let's compare this quarter's results with what I expected in my valuation model:

1) Dilution factor

I have 1.02 in the valuation model. Wow, the company bought back shares in a rage. I had 143.22 million ADS as the initial share count, but now the company has 126,405,148 ADS basic and 136,425,912 ADS on a fully diluted basis (I'll change my initial share count). The share count declined 3.8% from the year ago levels. I'm also going to change my dilution factor from 1.02 to 1.

2) Revenue CAGR

I expected 15% revenue CAGR for the next three years. Q1 2007 revenue growth from the year ago levels was just 4.77%, especially due to a decline in advertising revenues, since online gaming revenues rose 6.7% from Q4 2006. Advertising now accounts for just about 10% of the company's revenues, with online gaming accounting for about 85%. If we annualize the 1st quarter growth in online revenues we'll get to a full year growth rate of 29.6%. Even if advertising falls to almost zero (I don't think this will happen), if online gaming revenue continues to grow at this pace it will exceed my 15% revenue growth target.

I'll keep 1.15 as my revenue CAGR estimate.

3) Net profit margin estimate

Net profit margin in Q1 2007 was 54.36%. I had 50% in my valuation model and I'll maintain that.

4) EPS multiple estimate

The Internet Information Providers industry trades at 32.85 times earnings. SINA trades at 55 times EPS and SOHU at 41 times. NTES at 15 times.

The results of the valuation model come as follows:



I expect NTES to return 40% a year going forward. The optimal selling price is $32.49. I'll continue holding NTES.

Quote from: wxmang on May 21, 2007, 08:31:03 PM
Yukii,

I hate to say this buddy but I think selling was a big mistake.
NTES beat the street by two cents and matched the high end of the earnings estimate.
The Revenues surpassed the High Estimates as well.
Lastly, the stock has been depressed for a long time. From Yahoo:
52-Week Change: -11.17%

I can see selling NTES if there was a huge run-up this year or before earnings.
This stock looks like prime pickins to me.

don't see it............

Quotedon't see it.......

Big movements take time to develop. Come back in a couple of months.

As has been the case lately, investors opted to see the glass half empty on NTES, focusing on the bad aspects of the earnings report, and ignoring for example that the company beat estimates for the 5th quarter in a row and that it is trading at just 15 times earnings.

I enjoy the candlestick left on the chart, it seems NTES is poised for a rally over the next few days. I'll keep holding NTES for the long term.

Quote
I expect NTES to return 40% a year going forward. The optimal selling price is $32.49. I'll continue holding NTES.

David how does a company growing at 13% give you 40% a year??

Quote from: yukiii on May 22, 2007, 06:46:28 PM

Quote
I expect NTES to return 40% a year going forward. The optimal selling price is $32.49. I'll continue holding NTES.

David how does a company growing at 13% give you 40% a year??

Simple, the stock is trading at 15 times earnings, it should be trading at more than double that valuation, that's where its industry peers are, and they're growing less than NTES.

Maybe ntes will be up today in sympathy with snda, which is up sharply premarket after reporting earnings. It would seem there's plenty of room for all these companies to operate in,including ncty.

Quote from: soxguy on May 23, 2007, 09:14:55 AM
Maybe ntes will be up today in sympathy with snda, which is up sharply premarket after reporting earnings. It would seem there's plenty of room for all these companies to operate in,including ncty.

SNDA ended up just 1.57% on the day after opening sharply higher. I should take a more in depth look at it. NCTY went down 4.5%. The Fool's have an interesting article about SNDA and NTES:

Shanda in Demand-a

NTES touched its $17.53 - $17.55 short term support level again yesterday. Let's see if it bounces, but perhaps it will have to go down to test the long term ascending trendline before bouncing strongly, that would be a nice trap (the ascending trendline currently stands at $16.98).

I'll continue holding NTES.

Quote from: David Randolph on May 24, 2007, 06:11:29 AM

Quote from: soxguy on May 23, 2007, 09:14:55 AM
Maybe ntes will be up today in sympathy with snda, which is up sharply premarket after reporting earnings. It would seem there's plenty of room for all these companies to operate in,including ncty.

SNDA ended up just 1.57% on the day after opening sharply higher. I should take a more in depth look at it. NCTY went down 4.5%. The Fool's have an interesting article about SNDA and NTES:

Shanda in Demand-a


NTES touched its $17.53 - $17.55 short term support level again yesterday. Let's see if it bounces, but perhaps it will have to go down to test the long term ascending trendline before bouncing strongly, that would be a nice trap (the ascending trendline currently stands at $16.98).

I'll continue holding NTES.

Picked up NTES @ $17.00. Hope the trendline holds.

I said this:

QuoteNTES touched its $17.53 - $17.55 short term support level again yesterday. Let's see if it bounces, but perhaps it will have to go down to test the long term ascending trendline before bouncing strongly, that would be a nice trap (the ascending trendline currently stands at $16.98).

The low of the day was $16.97 and BigSully1 ...

QuotePicked up NTES @ $17.00. Hope the trendline holds.

... bought right at support. The only thing lacking is the a rally now. Let's see what the next few days bring, I hope it's not a breakdown, since NTES is now trading at 14.8 times this year's estimated earnings.

I'll continue holding NTES.