58.Com Advances on Second-Quarter Revenue Outlook

58.Com Inc. (WUBA) rose the most in three weeks in U.S. trading on speculation the Chinese classifieds website operator may report quarterly sales that exceed the company’s forecast as online advertising growth accelerates.

The company’s American depositary receipts gained 5.1 percent in New York, the biggest rally since July 28. LightInTheBox Holding Co., which sells Chinese-made goods to customers overseas, advanced 8.9 percent to a six-week high. The Bloomberg China-US Equity Index climbed 1.3 percent to 117.15, the strongest level since May 2011.

58.com, whose shareholders include Tencent Holdings Ltd. and Goldman Sachs Group Inc., said in May it expected second-quarter revenue to be between $61 million and $63 million. Fast growth in local Internet advertising probably means sales exceeded that, according to Jeff Papp, the senior analyst at Oberweis Asset Management Inc. Twenty-three of 34 companies in Bloomberg’s index of Chinese stocks in the U.S. that have reported quarterly earnings beat analysts’ revenue estimates.

“This is going to be clearly one where they should do better on the top line, and people will get really excited if they can also see some margin expansion,” Papp said by phone yesterday. “They have local content online, which is a sub-segment a lot of big players would like exposure to. Big companies like Tencent may not have a good reach into that.”

Online Advertising

Beijing-based 58.com is scheduled to report its second-quarter results on Aug. 21. LightInTheBox, which is set to disclose its earnings tomorrow, raised its sales forecast in June, citing better product offerings and an improved customer experience.

58.com advanced to $52.53. Trading volume of 2.47 million shares was double the daily average of the past three months.

The company said in a May 21 statement that it expected second-quarter revenue to rise at least 74 percent from a year earlier. Chinese online ad spending may double to almost $30 billion by 2018, according to EMarketer, accounting for 47 percent of the Asia-Pacific region’s total.

While the Internet replaced television in China last year as the biggest media channel in terms of user time spent, ad spending allocation has yet to capture the change in user behavior, analysts led by Alan Hellawell at Deutsche Bank AG wrote in a June note.

LightInTheBox, Cnooc

LightInTheBox rose to $6.72 on 1.8 times average volume. The Beijing-based online retailer may report a 17 percent increase in second-quarter sales to $84.8 million, after an 11 percent increase in the prior quarter, according the average of three analyst estimates compiled by Bloomberg.

Cnooc Inc. (CEO), China’s biggest offshore oil explorer, increased 5.3 percent to $198.80, an eight-month high, after Credit Suisse raised its rating to the equivalent of hold from sell.

The iShares China Large-Cap ETF, the biggest Chinese exchange-traded fund in the U.S., gained 0.8 percent to $41.40. The Standard & Poor’s 500 Index (HSCEI) increased 0.9 percent as tensions eased over global conflicts and Dollar General Corp. rallied on merger activity.

The Hang Seng China Enterprises Index slipped 0.4 percent to 11,065.21. The Shanghai Composite Index (SHCOMP) climbed 0.6 percent to 2,239.47.

To contact the reporter on this story: Belinda Cao in New York at lcao4@bloomberg.net

To contact the editors responsible for this story: Nikolaj Gammeltoft at ngammeltoft@bloomberg.net Richard Richtmyer, Marie-France Han

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