Dangdang Advances as NetEase Retreats: China OvernightBelinda Cao
Chinese equities traded in New York rose, with E-Commerce China Dangdang Inc. advancing on prospects it will benefit from the Singles Festival shopping event. NetEase Inc., a web game operator, retreated after reporting lower-than-estimated profit.
The Bloomberg China-US Index of the most traded Chinese stocks in the U.S. gained 0.7 percent to 102.5 yesterday. Dangdang climbed to a three-week high, while LightInTheBox Holding Co. rallied the most since July. Baidu Inc., owner of China’s most-popular Internet search engine, advanced after its valuation dropped to a two-month low. NetEase sank the most this month and Phoenix New Media Ltd. tumbled 11 percent.
Alibaba Group Holding Ltd., China’s biggest e-commerce company, posted record sales of 35 billion yuan ($5.7 billion) during a shopping festival on Nov. 11, it said on its Twitter Inc. account. Dangdang reported a quarterly loss that was smaller than analysts’ projections and LightInTheBox, which sells lifestyle goods to overseas markets, may report sales of $70 million, Bloomberg data show, compared with $68 million to $70 million earlier forecast by the company.
“Almost every e-commerce company benefited from the Nov. 11 shopping sales promotions,” Henry Guo, an analyst at ABR Investment Strategy LLC, said by phone from San Francisco. “Some of Dangdang’s third-quarter numbers beat people’s expectations.”
The iShares China Large-Cap ETF, the largest Chinese exchange-traded fund in the U.S., gained 0.9 percent to $36.83 in New York, snapping a two-day slump. The Standard & Poor’s 500 Index climbed 0.5 percent to extend a record as comments from Janet Yellen signaled she will continue the Federal Reserve’s stimulus efforts.
Dangdang, China’s biggest online book seller, advanced 4.1 percent to $9.38, the highest close since Oct. 25. Beijing-based Dangdang reported a net loss of 6 cents per ADR for the three months ended in September, which was smaller than six analysts’ average projection of 8 cents. Gross margin increased to 18 percent from 15 percent a year earlier, according to the company’s statement yesterday.
Alibaba’s sales during the Chinese Singles’ Day shopping Festival on Nov. 11 broke last year’s record of 19.1 billion yuan, the company said a day after.
LightInTheBox jumped 12 percent to $10.41, the biggest gain since July 17. The Beijing-based company is scheduled to release third-quarter financial results Nov. 19.
Baidu added 3.9 percent to $158.99 in the biggest advance in three weeks. The American depositary receipts traded at 23 times estimated earnings last week, the lowest multiple in two months.
ADRs of NetEase, China’s second-biggest online game operator, retreated 4.4 percent to $66.35, dropping the most since Oct. 28.
The company said third-quarter net income rose to $171.3 million, below the average estimate of seven analysts compiled by Bloomberg. Deutsche Bank AG cut the stock’s rating to hold from buy yesterday and lowered its price estimate to $66 from $73.
“NetEase’s disappointing results were due to its lower-than-expected sales of several major titles,” Nick Ning, a Shanghai-based analyst at 86Research Ltd., said by phone. “Games entering mature stage is a problem for everyone, and the key to grow in the next few years lies in their ability to launch new successful games on desktop and mobile.”
Ning recommends investors buy NetEase after shares fall to “low $60s,” citing the outlook for their 2014 financial year.
YY Inc., owner of a social entertainment website, proposed to issue as much as $250 million in convertible notes due in 2018 in a statement yesterday.
ADRs of the Guangzhou-based company sank 2.4 percent to $52.68, falling the first time this week.
Xinyuan Real Estate Co. plunged 11 percent to $5.63, the biggest retreat in eight months. The Beijing-based property developer said Chief Financial Officer Kevin Wei resigned due to “personal reasons” in a statement yesterday. Xinyuan appointed Helen Zhang, its financial controller, as interim CFO.
ADRs of Phoenix New Media, a TV and Internet news outlet, tumbled to $9.09, sliding the most in two weeks.
The Hang Seng China Enterprises Index in Hong Kong advanced
1.1 percent to 10,391.13, rising for the first time in three days, while the Shanghai Composite Index climbed 0.6 percent to 2,100.51.
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