Chinese stocks listed in the U.S. declined for a second day as Mindray Medical International Ltd. (MR), a medical device maker, reported first-quarter revenue that trailed analyst estimates.
The Bloomberg index of the most-traded Chinese stocks in the U.S. fell 0.5 percent to 99.12 in New York yesterday. Mindray Medical tumbled the most since January after its sales fell short of analysts’ forecast by more than 9 percent. YY Inc. (YY), owner of an entertainment website, sank the most in six months on concern its growing music business may dilute profit margins. Alibaba Group Holding Ltd. filed for what could become the largest U.S. initial public offering ever.
Ten of the 13 U.S.-listed Chinese companies that have released first-quarter earnings reported revenue that trailed analyst estimates, data compiled by Bloomberg show. A survey by HSBC Holdings Plc and Markit Economics released May 5 indicated that manufacturing contracted for a fourth month in April, adding to concern that China’s economic growth is faltering.
“Chinese hospitals are reluctant to spend and that is weighing on Mindray’s topline results,” John Zecy, an analyst at Morningstar Inc. in Chicago, said by phone. “We’ll definitely see some near-term pressure on the share prices.”
The iShares China Large-Cap ETF, the largest Chinese exchange-traded fund in the U.S., rose 0.2 percent to $34.76. The Standard & Poor’s 500 Index fell 0.9 percent as lower profit from American International Group Inc. dragged down financial stocks and Twitter Inc. slumped.
Mindray Medical declined 6.1 percent to $31.61, the lowest since March 27. The Shenzhen-based company reported quarterly revenue of $264.8 million, compared with an estimate of $292.5 million among analysts surveyed by Bloomberg. Earnings of 39 cents a share beat the forecast by 1 cent. The company said Chief Operating Officer Jie Liu has resigned for personal reasons.
YY, which operates a website that offers chatrooms and games, dropped 8.4 percent to $56.78, the lowest since Jan. 2
The Guangzhou-based company said its adjusted earnings declined to 56 cents in the first quarter, compared with 60 cents in the previous three-month period and an average forecast of 49 cents in a Bloomberg survey of five analysts. The company said it will buy back $100 million worth of shares.
Gross margin fell to 52 percent from 54 percent a year earlier as the growth of online music and entertainment boosted content costs, the company said in the statement.
Echo He, an analyst at Maxim Group LLC., maintains her buy rating on YY, saying the company’s growing market position will help improve its pricing power and boost revenue.
“The fundamentals of YY still look attractive,” said He in a phone interview from New York.
Deutsche Bank AG’s analysts said the earnings results were “solid,” keeping their buy rating.
Alibaba, founded by former English teacher Jack Ma, filed for its U.S. IPO after the close of trading in New York. The online marketplace might raise as much as $20 billion, topping a $19.65 billion offering by Visa Inc. in 2008, data compiled by Bloomberg show.
Ctrip.com International Ltd. (CTRP), China’s biggest online travel agency, rose 0.2 percent to $48.38.
Seven of nine analysts surveyed by Bloomberg estimate that the Shanghai-based company today will report revenue growth in the first quarter of more than 30 percent, the upper end of the company’s projected range. Ctrip’s profit will decline to 25 cents a share, from 30 cents a year earlier, according to the data.
Ctrip has been investing in its rivals to avoid price wars and preserve profit margin. It paid more than $200 million last month for a stake in Tongcheng Network Technology Share Ltd., a ticket sales agent.
“The company is investing in its competitors, turning them into allies,” Tian X. Hou, the founder of T.H. Capital LLC, which follows U.S.-listed Chinese companies and recommends buying Ctrip, said by phone from Beijing. “In the future, the margins will improve.”
The Shanghai Stock Exchange Composite Index was little changed at 2,028.038 yesterday. The Hong Kong markets were closed for a holiday.
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