CHINA

[macaddictsg01]

Looks like the newly introduced IPO BIDU.com helped the CHINA DOT COM resist above 3.00 level. Well probably this will be the kick for this year for CDC.

[shawFund]

About China:

   It is better to wait for its earning report. If it reports a profit, the stock will fly.

   But from a TA's point of view, it is a STRONG BUY.
   
   The stock has been trading higher lows since its bottom at $2.50:

   Lows are: $2.50, $2.75, $2.94, $3.07.

   The company has a lot of cash, basically break-even and not a lot of downside risk from $3.00.

   I have bought it few times recently but exited last week waiting for ER.

[macaddictsg01]

Hi,

Based on the insider transaction, the margin price of selling their Direct Sale is around the price CHINA is been demonstrating.

(From http://finance.yahoo.com/q/it?s=CHINA)
8-Jun-05 24/7 REAL MEDIA INC 160,000 Direct Planned Sale $526,400 (aprx sold at 3.29)
7-Jun-05 CHU, NICOLA 350,000 Direct Planned Sale $1,207,500 (aprx sold at 3.45)
1-Jun-05 CHAN, STEVEN Officer 30,000 Direct Planned Sale $91,497 (aprx sold at 3.05)

The price high spikes at 3.50 last Friday. Can this 3.50 be the peak or this will just be the beginning of rise?

I am a beginner when it comes to analysis, but sometimes due to my instinct , i gain some. I still need to study many many things about the ANALYTICAL WAY of doing my research. 

Cheers from Taipei! 

[David Randolph]

The chart looks allright, the long term downtrend is no longer in place. I don't know, but if the Friday's rise was due to the BIDU's IPO, I don't thing that's a valid fundamental motive for CHINA to rise.

Let me give you the long and short term chart:

[macaddictsg01]

Hi David,

Thanks for the quotes. Earning Report for CHINA will be this 19th of August and the chart looks ok, but bit worry about the reports they gonna be realising. OPTIONS are also scheduled to due on the same date.

But possibilities of rising or drawing to south is stil unexpectable. What is the best timing to buy then?

[rocket8]

china does it.

[shawFund]

Most likely the run for CHINA is over.

It gapped up at $3.6 but closed at its low of $3.33.

It has a strong resistance at $3.6-$3.70

The key: earnings reported on August 19 is not so exicting.

[macaddictsg01]

So it seems that the investors loose their appetite in clinching this stock? So how about their earnings result from lost to positive revenue?

HONG KONG (AP) -- Software provider CDC Corp. on Friday reported a small profit for the second quarter, reversing a year-ago loss, driven by strong revenue growth.
Net income was $36,000, or nil per share, compared with a loss of $2 million, or 2 cents per share, a year earlier. Adjusted to exclude certain nonoperating costs, the company posted net income of $5.4 million, or 5 cents per share, in the latest quarter versus a profit of $2.7 million, or 3 cents per share, a year earlier.The company, formerly known as chinadotcom, said revenue jumped 44 percent to $64.6 million from $44.9 million.

Is this a very promising one? Please advise.

From Singapore

[David Randolph]

So it seems that the investors loose their appetite in clinching this stock? So how about their earnings result from lost to positive revenue?

HONG KONG (AP) -- Software provider CDC Corp. on Friday reported a small profit for the second quarter, reversing a year-ago loss, driven by strong revenue growth.
Net income was $36,000, or nil per share, compared with a loss of $2 million, or 2 cents per share, a year earlier. Adjusted to exclude certain nonoperating costs, the company posted net income of $5.4 million, or 5 cents per share, in the latest quarter versus a profit of $2.7 million, or 3 cents per share, a year earlier.The company, formerly known as chinadotcom, said revenue jumped 44 percent to $64.6 million from $44.9 million.

Is this a very promising one? Please advise.

From Singapore

My 2 cents: earnings were good but the stock wasn't technically ready to advance. Longer term I see the symmetrical triangle on the chart below breaking on the upside for CHINA.

I would definitely buy it if it comes down to support at $3.02, but probably I won't have that chance.

Good luck macaddictsg01 

[macaddictsg01]

Hi David,

Thank you for your insights.

Additionally, since I been studying with this stock for almost three years, i did always observe that foreign shares listed in NASDAQ always goes to south whenever the US dollar strengthens against asian currencies.

Does it has really something to do with the US Dollar stabilities, or just only coincidence?

Cheers & more power to 3stocksonfire.org

[macaddictsg01]

ANother promising hope for CHINA.com (CDC)

HK economy to grow by 6 percent this year
       

The latest report of Bank of China (Hong Kong) Limited (BOCHK) indicates Hong Kong economy increased by 6.5 percent in the first half of the year, higher than market expectations. Therefore, BOCHK has revised its economic growth forecast for 2005, raising it from 5 percent to 6 percent.

BOCHK says the adjustment means Hong Kong's economic growth will reach 5.5 percent in the second half of the year; its unemployment rate will hopefully decrease to 5.3 percent by yearend; and the whole-year inflation rate will be 1.2 percent.

According to BOCHK, oil price and rise of interests are the biggest factors that may affect prospect of the Hong Kong economy. Statistics of the HK SAR government show the government still maintains forecast of economic growth at 4.5 percent to 5.5 percent.

By People's Daily Online

[la-onda]

update:

CDC Software Acquires India-based IT Outsourcing Company
Tuesday , February 21, 2006 07:50 ET

ATLANTA, Feb 21, 2006 /Xinhua-PRNewswire via COMTEX/ -- CDC Software, a wholly owned subsidiary of CDC Corporation (Nasdaq: CHINA), today announced that it has purchased the IT consulting services business of Horizon Companies, Inc., a privately held New Jersey company which principally offers outsourced information technology professional services in the United States and Canada utilizing India-based resources.

Horizon was founded in 1989 and has a 17 year track record of profitable operations servicing large and medium sized companies principally in the northeastern and central United States. Horizon currently employs over 200 IT consultants who staff several major contracts. Customers include public companies such as AT&T, Citigroup, Dendrite International, Emerson Power, Henry Schein, Lucent, Pfizer and YSI, as well as privately held companies like Inductis and Opera Solutions.

Mr. Shirish Nadkarni, chief executive officer of Horizon Companies, who together with his partner Mr. Girish Nadkarni has agreed to stay after the acquisition to manage Horizon's customer base, stated, "I am thrilled to have Horizon Companies join the CDC Software family. Our customers will certainly benefit from the wider range of experiences and depth of resources we can draw upon through CDC Software. Also, our employees with significant experience with ERP packages like SAP, Oracle and JD Edwards and CRM packages like Siebel are expected to generate strong synergies with similar products offered by Ross, Pivotal and IMI through CDC Software."

CDC Software expects the transaction to be earnings accretive beginning immediately since part of the consideration is to be paid on an earn-out basis.

"We are extremely pleased with this significant expansion of our outsourced IT consulting services capabilities. With the addition of Horizon, we now have over 500 consultants in this line of business." said Mr. Rick Marquardt, president of CDC Software. "In addition to enhancing our business services line of business, we expect to cross-train these consultants in the suite of Ross, Pivotal and IMI products offered through CDC Software. The consultants would be additional high quality resources we can draw upon to provide the most cost-effective implementations for customers in our software business, particularly in Asia and EMEA."

Dr. Rajan Vaz, managing director of CDC Software's current IT consulting services business who will take primary responsibility for integrating Horizon and realizing the synergies from the acquisition, stated, "We are improving quality for our professional services customers while also improving our operating margins. It is a win-win situation." He continued, "Given this, I expect us to continue to look to grow our outsourced information technology professional services line of business aggressively in the future. We are looking at other opportunities which, if they are right for us and can be earnings accretive, we hope to bring to fruition in the next several months."

[David Randolph]

Since CHINA made its partnership with Google, the stock has been on people's radar and moving higher ever since.

But there's more to this stock than that, as you can read on the analysis published below.

I want to be in before the earnings release on tomorrow's close, because I think they can beat 3Q estimates. There's nothing new to this story to anybody that knows the stock, but I guess a lot of people on the sidelines will become aware of it after the earnings release. And it is quite a bullish story, with below average multiples and above average growth, and as you'll see below, no meaningful dilution since 2000.

I want to add CHINA to the 3 Stocks on Fire Portfolio, around $6.85, today. 6.66% of capital as always.

«1. Profile

The CDC family of companies includes CDC Software focused on enterprise software applications and services, CDC Mobile focused on mobile applications, CDC Games focused on online games, and China.com focused on portals for the greater China markets. For more information about CDC Corporation (NASDAQ: CHINA), please visit www.cdccorporation.net.

2. Technical Analysis
2.1. All History Chart



We almost can't see the current bull trend on the long term chart. As any internet related stock, CHINA had its bubble and crash. But it was one of those that survived.

2.2. Medium Term Chart



The medium term trend is bullish. There are resistance levels around $7.96, $12.75 and $14.90. The 200 day SMA has been a good indicator to predict CHINA.

2.3. Short Term Chart



Everything on CHINA's chart is pointing north: the trendline, the moving averages, the average volume, etc.

3. Fundamental Analysis
3.1. Number of Shares Outstanding



I'm surprised and pleased that the share count is almost the same now as it was back in 2000. This is almost a first for a Chinese company. The current market cap is 112.66 million*$6.835 = $770 M.

3.2. Liquidity



The current ratio has been higher than what it is now, but still $95 M in working capital and $129 M in cash and marketable securities. I think the balance sheet is ok.

3.3. Revenues



There's solid revenue growth since 2002. $305 M expected for the full 2006, so the revenue multiple is $770 M / $305 M = 2.52. This is about the average of the Internet Software & Services industry.

3.4. Profits



Analysts expect CHINA to be very profitable in 2006 and 2007. The average estimate for 06 EPS is $0.24 and for 07 it is $0.37. This is very fast growth. If these estimates are correct, the 07 forward multiple would be 18.5, and the growth rate would be 54%.

If the 06 EPS figure proves correct (CHINA needs to make $0.16 for the remaining two quarters - they still didn't report 3Q EPS, they will tomorrow), the current earnings multiple is 28.5. The average for the industry is 40.8.

3.5. Recent News

- «As published on July 17, 2006, the company's estimates for 2006 place total revenues in the range of US$300 million to US$305 million and (1)adjusted net income in the range of US$31.6 million to US$32.8 million.»

More recently they revised this revenue guidance to $305 M - $308 M. Probably net income will be something like $33 M, or about $0.29 a share. This is more than the $0.24 analysts are estimating (perhaps due to GAAP and non GAAP numbers). The current earnings multiple would then be 23, and the industry's average is 40.8.

- «... the company expects total revenues for the fiscal year ended December 31, 2006 to be in the range of US$303 million to US$307 million, an increase of over 24 percent over 2005's revenues. The company anticipates *adjusted net income to be in a range of $32.0 million to $33.3 million, an increase of over 100% over 2005's results. This is the second time in four months that the company has upwardly revised its fiscal year outlook.»

I guess everybody already knows about the 06 numbers, so probably they were already discounted by the share price (even though the multiples are lower than the industry's average).

4. General Overview

I'm undecided on what to think about these numbers in terms of the share price. In one hand, the company already made a lot of publicity on them, on the other, visibility and predictability is usually something that drives the multiples higher.

CHINA is a company of the future, engaged in software, mobile applications, online games and  internet portals. I love all these sectors. Valuation also seems attractive, with below average multiples and above average growth.

Usually the issue that kills these high growth Chinese stocks is their habit to dilute shareholder value. But I don't see that at all in CHINA, to my big surprise.

I don't know if 3Q numbers that will be released tomorrow will make the stock rally or decline, but I would see any decline as a buying opportunity. Therefore my outlook is positive on CHINA.»

[David Randolph]

Good news on CHINA, they're planning an IPO of CDC software or CDC games and getting money from that right away:

UPDATE - CDC Corp to sell $168 mln of convertible notes

The stock is up 5% on the pre-market, breaking out to a new high. I know it takes a lot of courage, but I'll add CHINA to the 3 Stocks on Fire Portfolio right away.

[David Randolph]

I'm waiting .... damnit.  Embarrassed


maybe we'll see that under seven price soon??? I've learned to wait and follow instructions! Evil

I think you're on the wrong thread anvilring, you're talking about CHINA, right?

I got in at $7.04 around the open ... the news came just about 10 or 15 minutes before the open (at least I only saw it then), so I couldn't alert on the newsletter, which said to buy at $6.85, which was Friday's high. But I think the news is significant enough and quite bullish (the conversion price is $10.37) and it hints an IPO of CDC games or CDC Software, which probably will have higher multiples than within CHINA.

I think CHINA is going higher. Good luck anvilring  Smiley

(let me copy paste this to the CHINA thread)