Ctrip Leads Rally to Two-Month High on Earnings: China Overnight
Chinese stocks climbed to a two-month high in New York as the nation’s manufacturing unexpectedly rose last month. Online travel agency Ctrip.com International Ltd. (CTRP) surged after reporting earnings that exceeded estimates.
The Bloomberg China-US Equity Index of the most-traded Chinese stocks in the U.S. climbed 2.3 percent to 94.73 yesterday, the highest level since May 21. Ctrip, China’s biggest online travel agency, soared 19 percent while competitor Elong Inc. (LONG) jumped 11 percent. Video website operator Youku Tudou Inc. (YOKU) advanced to a six-month high and Renren Inc. (RENN) surged the most since January 2012.
Barclays Plc and Stifel Nicolaus & Co. raised their recommendations on the American depositary receipts of Ctrip to the equivalent of buy after the Shanghai-based company reported second-quarter net income that beat analysts’ average projection by 38 percent. The July reading of China’s official Purchasing Managers’ Index rose to 50.3 from 50.1 in June and exceeded analysts’ median estimate of 49.8.
“There’s still a very attractive consumption story to take advantage of in China,” Marc Tommasi, head of global investment strategy at Manning & Napier Advisors Inc., which manages $46.3 billion in assets including Chinese equities, said by phone from Rochester, New York. “We started to see signs of stabilization in the Chinese economy. There are also a lot of well-positioned, market-oriented, profit-driven firms that we find very attractive.”
The iShares China Large-Cap ETF (FXI), the largest Chinese exchange-traded fund in the U.S., climbed 1.9 percent to $34.92, the highest price in seven weeks. The Standard & Poor’s 500 Index added 1.3 percent to 1,706.87 after central banks vowed to maintain stimulus and data on global manufacturing beat forecasts.
Ctrip’s ADRs jumped to $43.72, the highest since August 2011. Trading volume on the stock was more than seven times the daily average over the past 30 days, according to data compiled by Bloomberg.
The company’s net income surged 76 percent in April-June period to $34 million, it said in a statement July 31. That compared with the average estimate of $24.8 million of seven analysts in a Bloomberg survey. Its sales of $203 million compared with the mean estimate of $190 million. Ctrip forecast revenue growth of as much as 25 percent for the third quarter.
“Ctrip’s results surpassed consensus in all aspects from top line, bottom line to margin,” Tian X. Hou, the founder of T. H. Capital LLC, which compiles research on U.S.-traded Chinese companies, said by phone from New York. “The company had very strong growth in flight booking, partly thanks to its promotional program for users of its mobile app, which became the most popular among competitors.”
ADRs of Beijing-based Elong, an online travel agency focusing on hotel reservations, surged to $16.27 in the biggest rally since August 2012.
Youku Tudou, owner of China’s biggest video websites, added 7.2 percent to $23.78.
The Beijing-based company’s Youku unit had 14 million daily unique users in June, compared with 7.9 million for iQiyi and 6 million for PPS, two web video sites owned by Baidu Inc., it said in a July 30 statement, citing data provided by iResearch Consulting Group.
Sina Corp., owner of Weibo, the biggest Twitter-like service in China, climbed 6.8 percent to $72.68, the highest level since March 2012.
Alibaba Group Holding Ltd., which in April agreed to buy a stake in the Weibo unit, will allow Weibo users to shop on its e-commerce website, the companies said in a joint statement yesterday. Alibaba, China’s biggest e-commerce company, disabled sellers’ access to competitor Tencent Holdings Ltd.’s instant messaging application in its own app shop, citing security reasons, Alibaba spokeswoman Florence Shih said in an e-mailed statement yesterday.
Renren, which owns a real-name social networking website, surged 20 percent to $3.98. Call contracts outstanding betting on gains in Renren’s ADRs surged 30 percent yesterday from a week earlier, option data compiled by Bloomberg showed. Calls were 5.6 times puts. The company said June 28 its board approved a plan to buy back as much as $100 million of its ADRs in a year.
Melco Crown Entertainment Ltd. (MPEL), a casino operator in Macau, climbed for a fifth day, rising 3.1 percent to a record $25.65 in New York.
Gaming revenue in Macau rose 20 percent in July from a year ago to 29.5 billion patacas ($3.7 billion), according to the website of the city’s Gaming Inspection and Coordination Bureau. That compared with a median estimate of 29.1 billion patacas from five analysts surveyed by Bloomberg News.
The Hang Seng China Enterprises Index in Hong Kong added 0.7 percent to 9,723.93, after rising 3.7 percent last month, while the Shanghai Composite Index (SHCOMP) surged 1.8 percent to 2,029.07 in a third day of gains.
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