- Youku also tumbles after revenue outlook trails forecasts
- Nation's U.S.-listed shares extend four-day slump to 8.8%
Jumei International Holding Ltd. sank the most on record, leading a rout among Chinese companies trading in New York, after it joined more than a dozen peers whose sales forecasts disappointed investors.
American depositary receipts of the Chinese online retailer of cosmetics tumbled 23 percent to $12.95. Video website operator Youku Tudou Inc. dropped 11 percent to a four-month low as its revenue outlook also fell short of estimates. A Bloomberg gauge for Chinese ADRs extended a four-day decline, mirroring a 7.6 percent drop this week in the Shanghai benchmark for mainland equities.
Jumei and Youku Tudou were the latest among at least 15 U.S.-listed Chinese companies in failing to meet analysts’ sales projections among a total of 21 that have provided quarterly targets, according to data compiled by Bloomberg. The number of firms that missed in outlook guidance has risen from 11 in the prior quarter and nine six months ago, as businesses are weighing the impacts of an economic slowdown and the yuan’s depreciation this month.
“The market sentiment toward Chinese ADRs is weak due to concerns about further currency depreciation and revenue weakness in the second half of 2015,” Gabriel Wallach, founder of North Grove Capital LLC in Boston which invests in Chinese stocks, said by e-mail Thursday. Besides Jumei’s third-quarter outlook, “its second-quarter profit margins were low, despite strong growth in sales and transaction value for the period.”
China’s central bank cut the yuan’s reference rate by 1.9 percent Aug. 11, triggering the biggest depreciation in two decades that roiled global markets.
Jumei’s trading volume of about 9.9 million was almost four time bigger than the daily average over the past three months.
Beijing-based Jumei forecast revenue of as much as $291.8 million for the three months through September, below the $294.4 million average projection of eight analysts compiled by Bloomberg. The outlook reflected a buffer to the yuan’s depreciation, which will reduce its sales in dollar terms, Co-Chief Financial Officer Meng Gao said in a conference call Thursday.
The company’s gross margin narrowed to 30 percent last quarter, the smallest since its U.S. debut in May 2014.
The market reaction to Jumei’s earnings was excessive and is creating a buying opportunity, according to Xiaoyan Wang, a Shanghai-based analyst at 86Research Ltd.
“Fundamentals were very strong in the second quarter and the growing momentum is not changed at all this quarter,” she said by phone. “Investors are over concerned about its third quarter guidance. The overall market sentiment is bad recently.”
Youku’s ADRs slid to $15.79, the lowest price since April. It expects sales of between 1.69 billion yuan to 1.78 billion yuan for the third quarter, compared with analysts’ average estimate of 1.79 billion yuan. Its second-quarter adjusted loss was smaller than analysts’ projections.
The Bloomberg China-U.S. Index for ADRs dropped 5 percent to 104.28, the lowest level since December. The gauge has tumbled 26 percent from this year’s peak on June 12 as a correction in China’s domestic equity market spread into peers trading overseas. Deutsche Bank AG’s X-trackers Harvest CSI 300 China A-Shares ETF fell 2.9 percent to a six-week low of $36.66.