LightInTheBox Plunges on Sales Outlook: China Overnight
The Bloomberg China-US Equity Index of the most-traded Chinese stocks in the U.S. fell 0.4 percent to 96.06 yesterday. LightInTheBox tumbled 40 percent as volume surged. Online bookseller E-Commerce China Dangdang Inc. (DANG) sank to a four-week low, while web fashion retailer Vipshop Holdings Ltd. (VIPS) slid for the first time in three days. Game operator Perfect World Co. plunged the most since March on lower-than-estimated earnings.
Beijing-based LightInTheBox, which sells lifestyle goods to overseas markets, reported second-quarter revenue of $72.2 million, 4.7 percent short of the average estimate of four analysts compiled by Bloomberg, and forecast sales that missed projections by as much as 14 percent. Credit Suisse Group AG downgraded the company’s rating to the equivalent of sell yesterday. The stock has rallied 22 percent since its initial public offering in June.
“They missed the top line and there was a quarter-to-quarter growth decline which people weren’t expecting,” Eric Brock, who helps oversee $4.2 billion as a portfolio manager at Clough Capital Partners, said by phone from Boston. “The stock has been running up quite a bit in the last month or so. The long-term outlook for China’s e-commerce sector is still favorable.”
The iShares China Large-Cap ETF (FXI), the largest Chinese exchange-traded fund in the U.S., dropped 1.4 percent to a one-week low of $35.57. The Standard & Poor’s 500 Index advanced 0.4 percent as retailers’ results surpassed estimates and investors awaited signals on stimulus measures from the Federal Reserve.
LightInTheBox’s shares sank to $11.58, the steepest slump since its debut June 6. Trading volume was 12 times the 90-day average, data compiled by Bloomberg showed.
The company estimated third-quarter sales to be between $68 million and $70 million, lower than revenues in the previous three months. Second-quarter net income of $648,000 compared with the mean projection of $1.8 million by two analysts surveyed by Bloomberg.
LightInTheBox traded at 34 times forward profit before plunging yesterday, which was “an expensive valuation,” Credit Suisse analyst Eva Wang said in a note, lowering her earnings forecast and the target price for the stock to $14 from $16.50. The rating was cut from neutral.
Beijing-based Dangdang, the country’s biggest web bookseller, slumped 7.7 percent to $8.46, the lowest level since July 24. Dangdang’s American depositary receipts have climbed 104 percent this year. Vipshop, based in Guangzhou, fell 4.3 percent to $41.37, paring its surge this year to 132 percent.
Perfect World, based in Shanghai, slid 7.9 percent to $18.99 in New York, the largest slump in five months. Trading volume was triple the three-month average.
The company reported Aug. 19 adjusted earnings of 33 cents per ADR, trailing the 36-cent average projection of four analysts surveyed by Bloomberg.
Trina Solar Ltd. (TSL), China’s third-largest panel maker, raised its 2013 annual shipment estimate by 14 percent after sales climbed to a record in the second quarter on Asian demand.
ADRs of the Changzhou-based company surged 15 percent to $7.82 in New York, rallying the most in three months.
The Hang Seng China Enterprises Index slipped 2.9 percent to 9,905.76, sinking the most in seven weeks. The Shanghai Composite Index (SHCOMP) slumped 0.6 percent to 2,072.59, after rising 0.8 percent the previous day.
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