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Shanda Earnings Reports: Last Piece In Chinese Gamers Profit Puzzle

Shanda Earnings Reports: Last Piece In Chinese Gamers Profit Puzzle

May 27, 2010 (Chinavestor) Earnings season hasn't brought much in the way of clarity for investors in Chinese online gaming firms with Netease.com (Nasdaq:NTES), the most profitable online gaming firm in China disappointing investors, worse numbers from Giant Interactive (NYSE:GA) and somewhat encouraging numbers from Perfect World (Nasdaq:PWRD).

Next week, the puzzle will be completed with Shanda Interactive (Nasdaq:SNDA) and spinoff Shanda Games (Nasdaq:GAME) due to report earnings on June 1 at 10:30 PM.

Shanda Games (Nasdaq:GAME) is a pure play on China's burgeoning online gaming market, which may have as many as 70 million current users. The company now accounts for 80% of Shanda Interactive's (Nasdaq:SNDA) profits, so saying these gaming firms are linked at the hip is somewhat of an understatement.

Analysts expect Shanda Interactive (Nasdaq:SNDA) to earn 65 cents on revenue of $201.74 million. The forecast for Shanda Games (Nasdaq:GAME) is a profit of 17 cents on sales of $171.55 million.

Disappointments from both firms along the same lines as those delivered by Netease.com (Nasdaq:NTES) and Giant Interactive (NYSE:GA) would almost certainly punish both Shandas and the sector at large.

Related story: Netease.com Q1 profit hurt on lower margins.


Giant Interactive: Another Glum Report From China's Gaming Sector


Perfect World tumbles on growth concerns

Shanda Games (Nasdaq:GAME) and Shanda Interactive (Nasdaq:SNDA) will probably need to handily beat estimates and offer strong full-year guidance to have investors feeling good about the sector again.

 
Knowledge base

China ADR Wrap May 26, 2010

China ADR Wrap May 26, 2010

May 26, 2010 (Chinavestor) If investors needed more evidence that the markets are looking for a direction, consider this: Wednesday was a complete reversal of Tuesday. The DJIA started out low  a day before and made a significant comeback by the end of the day. Today, it was just the opposite: a strong market day turned into a loss by the end of the day.

The same was true for Chinese stocks. The Hang Seng Index and the Shanghai Composite Index fell on Tuesday but both indices advanced the next day. 

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Knowledge base

China stocks on the move by noon, May 26, 2010

China stocks on the move by noon, May 26, 2010

May 26, 2010 (Chinavestor) Chinese stocks are on the rise on the heel of positive U.S. market sentiment. Strong home stales and factory orders reassured investors that the recovery is for real, helping them focus on the good news instead of Europe's troubles. Energy stocks pulled the iShares FTSE/Xinhua China 25 Index (NYSE:FXI) up 1.2% for the day and small cap China ADR proxy Claymore/AlphaShares China Small Cap ETF (NYSE:HAO) advanced half of that.

Earnings helped, too: Solarfun Power Holdings (NASDAQ:SOLF) beat estimates before the bell, setting a stage for the rest of the market. Yingli Green Enrgy (NYSE:YGE) and Trina Solar (NYSE:TSL) reported earlier the week, all three companies surprising to the upside.

Smaller cap China ADRs on the move include China GrenTech (NASDAQ:GRRF), China Integrated Energy (NASDAQ:CBEH), and Qiao Xing Mobile Communications.(NYSE:QXM). Semiconductor Manufacturing Int. (NYSE:SMI) jumped 8.3% making up for all the losses on Tuesday.

Besides volatile small cap stocks, such as China GrenTech (NASDAQ:GRRF) or Qiao Xing Mobile Comm. (NYSE:QXM), large cap China plays have steadily advanced. Twenty three components of the twenty five member Xinhua 25 Index rose earlier earlier the day in Asia. No wonder the iShares FTSE/Xinhua China 25 Index (NYSE:FXI) is showing strength on Wednesday. Shares of China Telecom (NYSE:CHA), the largest Chinese fixed line carrier, rose 3.8% by noon while Petrochina (NYSE:PTR), the largest Chinese oil producer, advanced 1.6%. Sinopec (NYSE:SNP), Asia's largest refiner, advanced 1.7% by noon on Wednesday.

Solarfun Power (NASDAQ:SOLF) jumped 13.7% on sound 2010 Q1 report. Solarfun beats 2010 Q1 estimates.

Yingli Green Energy (NYSE:YGE) rose over 2% on the news, making up for some of the losses it suffered earlier the week. The company surprised to the upside earlier the week, too. Yingli back to profit, trading at discount.

Higher oil prices helped bio-diesel producer China Integrated Energy (NASDAQ:CBEH) to jump 9.7%.

Liquid, NASDAQ listed China plays advanced, as predicted in the pre-market report, by saying "Volatile stocks may offer the best turnaround opportunities like Baidu.com (NASDAQ:BIDU), Sohu.com (NASDAQ:SOHU), Sina Corp. (NASDAQ:SINA) or Ctrip.com (NASDAQ:CTRP) from the liquid NASDAQ names." Oversold China plays to watch on Wednesday.

Ctrip.com Int. (NASDAQ:CTRP) is up 3.2% followed by Shanda Interactive (NASDAQ:SNDA) with a 2.6% advance. Baidu.com (NASDAQ:BIDU) gave up all its early morning gains by noon - yet remains an explosive stock to pay attention to.

Knowledge base

China ADR Wrap May 25, 2010

China ADR Wrap May 25, 2010

May 25, 2010 (Chinavestor) – Chinese equities declined for the first time in three days due to elevated concerns that the government there will move swiftly to cool the real estate market and prevent asset bubbles from forming.

Europe's debt woes continue to pressure commodities prices all over the world, a trend that weighed on Cnooc (NYSE:CEO) and Sinopec Shanghai Petrochemical (NYSE:SHI) both losing more than 2%. Yanzhou Coal (NYSE: YZC) was another Chinese commodities name that took a bath on Tuesday, shedding almost 4% despite news that JPMorgan Chase (NYSE:JPM), the second-largest U.S. bank, increased its equity stake in the coal producer.

China Eastern Airlines (NYSE:CEA) jumped 14% yesterday, making it the biggest percentage gainer on the New York Stock Exchange, but the shares gave back almost all of those gains today, shedding nearly 11%. Rival China Southern Airlines (NYSE:ZNH) fell sympathy, losing more than 4%.

WSP Holdings (NYSE:WH), the maker of casing and tubing products for oil and natural gas explorers, was slammed on a weak earnings report that saw the company move to a first-quarter loss from a profit a year earlier. Sales slumped almost 69% and shares of WSP Holdings (NYSE:WH) fell almost 13%. Falling oil prices were not kind to WSP Holdings (NYSE:WH), but they aren't helping solar stocks either. Trina Solar (NYSE:TSL), reported first-quarter results that beat estimates, but the shares fell as tumbling oil prices continue to pressure the solar sector.

For-profit education provider ChinaEdu (Nasdaq:CEDU) was down on a tepid profit report issued last night. Yingli Green Energy (NYSE: YGE) lost 5% after a decision to delay a new solar plant. Ardour Capital downgraded the stock to “hold” from “buy.”

Hybrid seed maker Origin Agritech (Nasdaq:SEED) fell more than 5% a day after Rodman Renshaw upgraded the stock and boosted the price target. China Infrastructure Investment Corp. (Nasdaq:CIIC) was a suspicious decliner, losing 8% on no news and volume that was well below the daily average.

In terms of winning Chinese issues, Acorn International (NYSE:ATV) gained 5.95% on no news, but the stock is still down more than 15% in the past month. China Technology Development (Nasdaq:CTDC) also gained more than 5% on no news, but strong volume. Healthcare-related names continued to be one of China's strongest sectors with Sinovac Biotech (Nasdaq:SVA) and Simcere Pharmaceutical Group (NYSE:SCR) gaining 2.5% and 1.25%, respectively. Volume was more than double the daily average in Simcere Pharmaceutical Group (NYSE:SCR).

Silver prices were down, but gold was up and that was enough to lift Silvercorp Metals (NYSE:SVM) 1%. Macau casino and resort giant Melco Crown Entertainment (Nasdaq:MPEL) popped 1.61% despite sparse headlines. Agria Corp. (NYSE:GRO) bucked the negative trend among agriculture-related stocks, adding 2.17%.

With risk appetite still low and the European debt crisis proving to be a producer of daily headlines that send investors running for the exits, Chinese stocks are having a hard time gaining traction, but Morgan Stanley said in a note to clients today that Chinese equities are factoring rising inflation and declining growth . Morgan Stanley called this a “mispricing” that could correct in the near-term.

 

Knowledge base

China stocks on the move by noon, May 25, 2010

China stocks on the move by noon, May 25, 2010

May 25, 2010 (Chinavestor) Every Chinese ADR but Giant Interactive (NYSE:GA)  is in the red by noon on Tuesday. HSBC Plc. (NYSE:HBC), Hutch Telecom (NYSE:HTX) China TechFaith Wireless (NASDAQ:CNTF) and Sinovac (NASDAQ:SVA) are unchanged.

Big movers to the downside in dollar terms: China Eastern Airlines (NYSE:CEA) tumbled -$5.69 or -12.44%, erasing most of the gains from Monday. CNOOC Ltd. (NYSE:CEO), China's offshore oil specialist, fell -$5.17 followed by Baidu.com (NASDAQ:BIDU).  Petrochina Ltd. (NYSE:PTR), Sina Corp. (NASDAQ:SINA), and NetEase.com (NASDAQ:NTES) all suffered as the markets retreat.

Chinese ETFs are falling along the broad market. Large caps have been holding on slightly better; the iSharesFTSE/Xinhua 25 Index (NYSE:FXI) is down -2.9% while the Claymore ALphaShares China Small Cap ETF (NYSE:HAO) lost -3.7% by noon.

Chinese online gamers fare better than the rest of the market: Giant Interactive (NYSE:GA) is virtually unchanged while Perfect World (NASDAQ:PWRD) lost only -0.7%. Shanda Interactive (NASDAQ:SNDA) is going to report earnings next week, completing the earnings season for the industry.

China TechFaith Wireless (NASDAQ:CNTF) surprised to the upside on May 20th with a bullish outlook on top of strong revenue and earnings growth. Shares of the company have been weathering the storm relatively well. China TechFaith Wireless Q1 Profit Rises.

China Eastern Airlines (NYSE:CEA) bumped up 14% on Monday just to fall back to the $40s the next day. Hope you sold your CEA holdings from the BEST portfolio as instructed on Monday. Here is the script from the email alert sent out to Advanced members at 12:30 on Monday: "

Dear Subscriber,

China Eastern Airlines (NYSE:CEA) is up 17% since last Friday. CEA is trading at $46.59 by noon.

Take profits now!

Wish you successful investing"

Origin Agritech (NASDAQ:SEED) jumped 16.6% on Monday following an analyst upgrade. But the road proved to be rocky, the stock is one of the biggest losers in percentage points by noon on Tuesday.

Chinese energy stocks are under pressure as the oil is down -2.8% as Europe's problems spread. CNOOC Ltd. (NYSE:CEO) and Petrochina (NYSE:PTR) shed among the most in dollar terms - but expect them to outperform once the markets stabilize. Baidu.com (NASDAQ:BIDU) is an explosive stock, might reach $80 in a matter of days, should market conditions improve. Internet heavy weight Sina Corp. (NASDAQ:SINA) and NetEase.com (NASDAQ:NTES) are value stocks that deserve better - but can't fight the market.

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