CHINA

[Dracull]

[email protected]   Dispite going against my principles 

Hope my principles loose this one and my wallet profits.

[rickjust]

hi,
got in on the 38% fib pullback to 720.
maxi

[David Randolph]

Today's volume was the highest in 14 months for CHINA. The stock closed somewhat shy of its intraday high, but still, it sure looks like a breakaway gap on the chart.

A breakaway gap happens when a stock gaps up over a resistance level. It jumps above the resistance. This shows such a strong demand and conviction from the bulls that most of the times the stock never looks back (well, at least not in a long period).

CHINA also had a breakaway gap on August 17th, when it jumped 9% from $4.64 to $5.07. That gap was never filled, even though the stock closed near the low of the day on the breakaway gap day.

I was expecting to buy CHINA around Friday's close, but I was forced to bid higher, buying around the open at $7.04, due to this news:

CDC shares rise on $168 mln notes offering
at MarketWatch (Mon 12:24pm)

This means CHINA plans to spin-off CDC Software or CDC Games or both. They already received proceeds from this spin-off, which they will use to make acquisitions and working capital purposes. CHINA expects to pay the loan with CDC Software or CDC Games shares.

We previously discussed that CHINA has an above average growth rate and a below average revenue and earnings multiple. Probably these multiples will expand if they're able to spin-off these subsidiaries (I don't see why not).

The sum of the parts is greater than CHINA. I read a research piece that appointed $13 - $14 a share value for the sum of the parts.

Anyway, I was going to buy the stock before this news came out. Tomorrow (I think it will be after the close), 3Q earnings will be out. I expect them to be above expectations. Either way, I'm not going to sell CHINA around current levels. I will win 50% or more or lose no more than 10%. I don't want to be shaken out of a fundamentally backed advance phase just because of a small correction.

[setravis]

Another fine Analysis David,(Applaud), and a good looking bull chart.

Google click to play and china...
Company also announced that its portal business unit has launched Google's (GOOG) click-to-play video in the China market via the China.com's English Channel. 

Business Overview.....
BRIEF: For the six months ended 30 June 2006, CDC Corporation's revenues rose 17% to $141.5M. Net income from cont. ops. totaled $9.4M, vs. a loss of $3.7M. Revenues reflect an overall increase in sales from software, business services, mobile services & applications, internet & media and an inclusion of online games revenues. Net income also reflects improved gross margins, decreased research & development expense and reduced interest expense. http://www.cdccorporation.net

CDC Corporation Earnings Conference Call (Q3 2006)
Scheduled to start Tue, Nov 14, 2006, 5:00 pm Eastern
Link.....  http://biz.yahoo.com/cc/6/75346.html

52wk Range: 3.06 - 6.98
Volume: 8,285,061
Avg Vol (3m): 1,922,610

Support @ $6.96...6.82...6.55
Resistance @ $7.25

Technicals
MACD is Bullish
Record Price High
Close Above the 13-day MA
Most Actives
Gap Up

Last Price Quote is:
10.77%above 13-day MA
19.09%above 50-day MA
RS Rating: 97 

Fundamentals
Earnings Expected on Nov 14

Key Data:
Market Cap (M): $617.62 
P/E Ratio: 67.67 
PEG Ratio: N/A 
Next Earnings: 11/22/2006
Last Analyst Rating: Equal Weight

[rickjust]

hi,
got out 728. didn't like the 5 min candles this morning . i was looking for a pop above 746 this morning and to get out before earnings , don't want to hold over on the hope that the market likes it .
glta holding,
max

[tokyopua]

I filled a half position at 7.00, and if it fills the gap today I might add another half position.  Go CHINA!

[David Randolph]

Earnings were out: CDC Corporation Reports Record Revenues of US$78.2 Million and Adjusted Net Income of $10.1 Million for Third Quarter of 2006, an Increase of 26% and 214%, Respectively, Over the Prior Year Period

These are outstanding numbers and the stock is up 8.6% after hours to $7.68.

EPS expectations were $0.06, actual numbers were $0.09, so 50% above expectations.

The company also provided 2007 guidance: revenues in the range of $401 M - $411 M and net income of $55 M - $60 M. So, if the number of shares outstanding stays basically the same (this has been the company's policy over the last 6 years), fiscal 2007 EPS guidance is $0.51. This year it will be about $0.27 - $0.28, so we're talking about almost 100% EPS growth.

If we apply the average earnings multiple of the Internet Software & Services Industry to CHINA, which is 40.86, we get a price per share in 2007 of $20.84.

CHINA stock has nowhere to go but up !

[David Randolph]

Today we had the highest volume in CHINA over the last 18 months or so, with 10.7 million shares changing hands. I already discussed the 3Q earnings report and I think there are only good things ahead for CHINA.

The last few days were quite emotional for CHINA traders and investors. Bulls clearly won the fight. Now I expect the stock to calm down and slowly but surely keep on moving higher. Of course there will be down days as we move along the path to true value, but the trend, that good old friend, is on our side.

[winner919]

David:

Great pick for CHINA. I noticed that they offered $168 M senior notes. do you worry about why they need so much money?

[David Randolph]

David:

Great pick for CHINA. I noticed that they offered $168 M senior notes. do you worry about why they need so much money?

Not much worry about that, the company said it will use the money for this:

"The company intends to use the proceeds from the transaction for acquisitions at both CDC Software and CDC Games, as well as game development, investment in research and development and for other general corporate purposes, including working capital to support new growth initiatives."

Another view, this time on the optimistic side, could be: «wow, somebody invested $168 M in CHINA, they probably know something we don't» or «the company's assets are very valuable».

I think this private placement isn't all that much relevant for CHINA. Moreover, the market already judged that and the verdict was: «it's bullish».

Technically the stock is making another island, just like the one we had in the beginning of the week. It sold off today, but held on yesterday's low, not closing the gap, again. The trend continues to be bullish, fundamentals are extremely attractive, I'll continue holding CHINA.

[David Randolph]

Two press releases on CHINA today:

InPlay: CDC Corp responds to inquiries regarding the co's Q3 results
Briefing.com (Fri 8:06am)

CDC Launches Video Service in China
AP (Fri 8:52am)

I know the stock is down a bit on the pre-market, but I feel it will breakout above $8 today. We'll see, anyway, I'll continue holding CHINA.

[rickjust]

hi,
got out 728. didn't like the 5 min candles this morning . i was looking for a pop above 746 this morning and to get out before earnings , don't want to hold over on the hope that the market likes it .
glta holding,
max
[/quote

back in 764
maxi

[rickjust]

some extra news for china.

CDC to Move Video Game Business Out From Web Portal Umbrella in $110 Million Restructuring


NEW YORK (AP) -- CDC Corp., a Beijing-based software company and operator of China.com, said Friday it will move its online game business out from beneath the umbrella of its Web portal business, in a restructuring move that will cost $110 million.
CDC Games Ltd. currently operates under the China.com Inc. business, of which CDC owns a 77 percent stake. CDC said it will pay China.com $110 million -- $50 million in cash and $60 million in debt -- to acquire 100 percent of the games unit. CDC Games will then become a direct business unit of CDC.

If CDC Games completes a successful listing on certain stock exchanges in the next 12 months, CDC will pay China.com an additional $25 million, the company said.

The agreement is subject to approval by China.com's board and independent shareholders.

Shares of CDC fell 17 cents, or 2.2 percent, to close at $7.53 on the Nasdaq, and dipped 3 cents after-hours.

[David Randolph]

I know the stock is down a bit on the pre-market, but I feel it will breakout above $8 today. We'll see, anyway, I'll continue holding CHINA.

Nope, my feeling was wrong.

Thanks for posting the news out after the close rickjust

CDC to acquire Games unit for $110 mln from China.com
at MarketWatch (Fri 5:10pm)

The stock was up 2% after hours on light trading. This is a good answer to those questions of some shareholders: «Why do you need the money?» They needed it to buy 100% of CDC games (they only have 77% of China.com and CDC games was 100% owned by China.com, a publicly traded company in Hong Kong), so they can make an IPO of CDC Games.
The IPO will probably be made in the following 12 months.

Although it doesn't always happen this way, I've seen this speculation theme on IIJI about a year ago or so, and the stock rose 100% in just about a month (great trade there  ), with people buying the rumor of the IPO, and then, of course, selling the news.

But CHINA stock doesn't need this speculation to rise, its internal numbers are sufficient.

Technically, the low of the day for the past 3 days was $7.53-$7.52, this is a bullish candlestick pattern called matching low. I expect CHINA to push higher next week and close the week above $8.

I'll continue holding CHINA without conditions.

[David Randolph]

Well, not all gaps are breakaway gaps, and CHINA went down to exactly close the latest gap that was open between $7.36 and $7.52. I've been predicting a rally on CHINA for a close above $8, and so far, nothing, just a small daily fall after another. Perhaps after closing this gap CHINA is now ready to push higher again, I think it should, given the extremely attractive fundamentals, but of course the market is always supreme.

Anyway, I maintain that I'll continue holding CHINA through tomorrow's session whatever happens.