Days Hao Capital released investment report today, maintain when buying rating

Summary: View the latest quotes Beijing time September 5 Evening News, investment company Days Hao Capital (t.h.capital) today issued an investment report to maintain Dangdang stock (Nyse:dang) Buy rating, while maintaining the target of 17 U.S. dollars unchanged. The following is a summary of the report: Check the latest quotes

Beijing time September 5 Evening News, investment company Days Hao Capital (t.h.capital) today issued an investment report to maintain Dangdang stock (Nyse:dang) "buy" rating, while maintaining the target of 17 U.S. dollars unchanged.

The following is a summary of the contents of the report:

After the first quarter of this year to achieve profits, when the August 14 released a profit of the second quarter earnings. In the second quarter, when net revenue was 316.1 million trillion, higher than Wall Street's expected $313.46 million trillion. Diluted earnings per share of 0.06 U.S. dollars, higher than Wall Street expected per share diluted earnings of 0.02 U.S. dollars. We believe that when a continuous quarterly profit, mainly benefit from the company's profitable media products and fast-growing apparel business balance. In the second quarter, when media product revenue rose 43.5% Year-on-year, is the company's total revenue growth of 31.3% per cent of the main driving force. Revenue growth in media products, while emerging apparel business revenue growth of more than 80% year-on-year, to promote when the second quarter operating profit margin reached 0.7%. We believe that when the balance strategy is to be pursued, it is believed that its profitability and GMV (total turnover) growth is sustainable. To this end, we continue to maintain the Dangdang stock "buy" rating, while maintaining a 17 dollar target share price unchanged.

The improvement in performance ensured media product revenue growth: The second quarter, when media revenues were 218.6 million dollars, rose 43.5% per cent year-on-year, the biggest increase since the IPO in the fourth quarter of 2010. We believe that this is mainly due to seasonal marketing, including the April reading season marketing, the May children's Day marketing, June-year promotions and the two or three-line city delivery speed upgrade. In the two or three-line city, the previous commodity delivery cycle was 2 days, and now it arrives for the next day. As at the end of 2013, when the number of cities served on the day was 19, the next day served 158. We believe that a rise in the pace of performance will continue to drive when media product revenue grows.

Stable profitability: When stable profitability is mainly benefited from the strong growth of market platform business, especially apparel business. On the one hand, when profits benefit from a renewed focus on high-margin media products. On the other hand, GMV's rapid growth is another driver. In the second quarter of this year, when the market business GMV reached 230.7 million U.S. dollars, an increase of 81.6%, of which more than 50% of GMV from clothing. When management anticipates, the third quarter market business GMV Rise will still reach 80%. While the current apparel business's contribution to profit is limited, it helps to attract new active users and will make up for the slowdown when the user gains in media products.

Mobile investment Returns: In the second quarter of this year, when the mobile business made significant progress. During the period, when 8 updates were made to its mobile application, the channels were added and many features were matched to the behavior of the mobile user. As a boost, the number of mobile orders in the second quarter grew by 17%, compared with 14% in the first quarter of this year, and 10% in the fourth-half year. The increase in June this year was 22%, with the highest day rising more than 35% per cent. We believe that the higher usage rate of mobile applications will boost when more orders are won.

Third-quarter results expected: When expected, the third quarter of fiscal year 2014 net revenue will reach 1.9836 billion yuan (about 319.7 million U.S. dollars), the year-on-year growth of 30%, higher than Wall Street expected 313.46 million dollars. In addition, the market GMV will grow 80% year-on-year.

Adjustment of performance expectations: We will be when the third quarter net revenue is expected to increase from 318.7 million U.S. dollars to 323.2 million U.S. dollars. Based on US general accounting standards, the projected earnings per share will be adjusted from $0.06 to $0.13. For the entire 2014 fiscal year, we will be when net revenue is expected to increase from 1.316 billion US dollars to 1.3308 billion dollars. Based on US general accounting standards, the projected earnings per share will be adjusted from $0.29 to $0.39. In fiscal year 2015, we will be when net revenue is expected to increase from 1.5407 billion US dollars to 1.5729 billion dollars. Based on US general accounting standards, the projected earnings per share will be adjusted from $0.46 to $0.78.

Second-quarter results: Total net revenue was $316.1 million trillion, up from Wall Street's expected $313.46 million trillion. Diluted earnings per share of 0.06 U.S. dollars, higher than Wall Street expected per share diluted earnings of 0.02 U.S. dollars.

Risk: 1 Fierce competition and continuous price war, 2 lower than expected market business GMV gain; 3 execution risk.

Other risks: 1 macroeconomic risks; 2 continue to operate in a loss-making manner that will create pressure on cash flow; 3 transfer or influence traffic from PC to mobile; 4 regulatory risk.

Valuation: We continue to maintain the "buy" rating on the Dangdang stock, while maintaining the 17 dollar target share price unchanged. (Li Ming)