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Wednesday, June 29, 2011

E Commerce China Dangdang Inc (DANG) - Too cheap to not buy?

The market has not been friendly to Chinese ADRs this year as some US listed Chinese companies revealed questionable accounting practices.  Shorters saw the opportunity and punished any stock with headquarter in China - including quality ones.  And this may very well be the opportunity to discover these decent Chinese stocks that were the wrong target for shorters.


One such company is E Commerce China Dangdang Inc. (NYSE: DANG).  To those of you who've never heard of the company, just like Bidu.com is the Google of China, Dangdang is a well know business-to-consumer(B2C) e-commerce company in China equivalent to Amazon.com(AMZN). Dangdang began as an online book retailer and became the largest book retailer in China. With strong customer base, the company later tap into broader market by selling general merchandise. By now you've probably seen the similarity with Amazon.com as the US online retail giant also followed the same path to success.
However when you look at the stock price and market cap, Amazon.com dwarf Dangdang Inc with market cap of $92 billion at $204.18 per share while the Chinese counterpart is a mere market cap of $189 million at $12.09 per share. Dangdang did have a successful IPO with shared traded as high as $36 per share end of last year. Unfortunately great company like this that generate annual revenue of $2.2 billion in 2010 also can get investor confidence and is now traded way below the IPO price. So seeing how Amazon.com did and there is a lot of hope in this beaten down stock.

1 Comments:

Blogger bharatbook said...

B2C E-commerce market in China to grow at a CAGR of 56.4 percent over the period 2011–2015. One of the key factors contributing to this market growth is the growing number of internet users. The B2C E-commerce market in China has also been witnessing the emergence of social media in the market. However, increasing price wars among e-commerce companies could pose a challenge to the growth of this market.

June 4, 2012 at 10:02 PM  

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