Dangdang downgraded by Morgan Stanley, market capitalisation worried

Morgan Stanley, the famous American investment bank, downgraded its Dangdang stock from "overweight" to "overweight" (Equal weight) level.

The stock rating was downgraded simply because Dangdang's current P/E ratio, which is expected to yield per share over the next 12 months, is above its historical level.

"The downgrade mainly reflects the high market capitalisation of Dangdang," Morgan Stanley said in a report. Dangdang now has a 0.8 times-fold earnings ratio, compared with 0.3 times to 0.6 times times its earnings in the past year. ”

Dangdang itself does not appear to have any problems.

An analyst Philip Wan, Timothy Chan and Gillian Chung wrote in a Friday study that said:

"Dangdang's earnings figures for the second quarter of this year were excellent and profit margins rose, thanks largely to the company's strong performance in the market and its increased efficiency." We are still bullish on China's e-commerce market and Dangdang's leadership in the area of Internet media distribution. Dangdang took full advantage of the rising momentum of China's e-commerce market. Half of China's online book market revenue is achieved by Dangdang, but only 2% to 3% of Chinese netizens have bought goods through Dangdang, which means there is still a lot of market potential to tap. ”

Over the past three months, Dangdang's share price has risen almost 130% per cent. Morgan Stanley analysts urged its investors to take full advantage of the opportunity to speed up the cash.

Chi Tsang and Joyce Ju, the HSBC analyst, reiterated that the "overweight" rating on Dangdang's shares remained unchanged and raised its target share price from $7.9 to $13.45.