Who Shot JRJC?

Discussion in 'Stocks' started by stonedinvestor, Feb 27, 2008.

  1. I just did a mini 500 shares because I'm a little put off by the early strength. This is The Street.com of China. Why am I buying China stocks? Because I'm running for cover out of their solar plays - YGE with a big loss and hoping top make it all back in one fell swoop... not easy especially on 500n shares, but lets see what this little monster will do for us. I'm In late of course @ $17.90 I had this pegged yesterday as a buy folks a buck lower.... pissed... you could wait for a pullback, but it's going to kiss $19 today before you see one... I dug this up.... ~stoney

    Check on China: China Finance Online
    Feb 07, 2008 6:20am EST

    The Shanghai Composite, the Chinese stock market's main index, fell 16.7% in January, its second-largest monthly drop this decade, sending whispers of an impending crash through the grapevine among some market watchers.

    Recent media reports point to former U.S. Federal Reserve chairman Alan Greenspan and Li Ka-shing, Asia's wealthiest man, saying the swelling of the Chinese stock market has created a "bubble" that may be on the verge of bursting. Along a similar vein, billionaire Warren Buffett has urged investors to be "cautious" investing in China.

    While an economic slowdown, fears of a U.S. recession and turmoil in global markets have created a slump in China's stock market (panicked selling has resulted in the fall of many Chinese companies from their previous high valuations), most experts predict the mainland market will continue the upward trend in 2008, but at a slower pace than recent years.

    Enter China Finance Online Co. Ltd. (Nasdaq: JRJC), one of China's leading providers of online financial and listed company data, information and research. Through its Web sites, jrj.com and stockstar.com, the company provides individual investors with subscription-based service packages delivered through proprietary software available by download, through the Internet or through mobile handsets. Its subsidiary, Shenzhen Genius Information Technology Co. Ltd, provides financial information and analysis to institutional customers including domestic securities and investment firms.

    Some savvy acquisitions have played a role in the company's growth. In 2006, China Finance purchased CFO Genius, a company in the business of building and maintaining financial information databases and data network solutions. Its Hong Hong unit acquired both CFO Stockstar and CFO Meining, which operates stockstar.com, a leading finance and securities site with over six million registered users. This past November, China Finance completed the $3 million acquisition of an 85% stake in Daily Growth Investment Company Limited, which offers securities brokerage services for stocks listed on Hong Kong Stock Exchange.

    China Finance's profit in the third quarter of 2007 more than tripled to $1.9 million from the same period in 2006, but the company expects fourth-quarter results, for the period ended Dec. 31, 2007, to be lackluster: adjusted earnings of $3 million to $3.4 million, on net revenue of $8.7 million to $9 million, which takes into account a non-cash impairment charge against China Finance's investment in Moloon International, Inc., a mobile stream media technology and service company. In a Jan. 28 statement, the company said the charge or the possibility of offloading Moloon stock would not affect its business growth.

    Last year, JRJC stock reached its 52-week low of $5 on Feb. 28 and soared to a mind-boggling $47.68 on Oct. 3, a run-up that gave China Finance the distinction of being the best-performing foreign-based company listed on U.S. exchanges. Since then, shares have fallen back to earth due in part to investor worries about Chinese A-shares and the Hong Kong market.

    On Jan. 28, China Finance announced it sealed a deal with China Telecom that will allow the company to deliver its financial information services to over 40 million users of China Telecom's nationwide broadband portal Vnet, one of the most visited websites in China. The agreement also gives China Finance access to more than 200 million China Telecom customers through its offline distribution network.

    "We believe that recent global market turmoil may significantly increase JRJC’s volatility in the near term," said Alex Xu, a New York-based analyst with Brean Murray, in a Jan. 22 update, noting that the China Telecom deal is "a significant long-term positive for the company."

    Xu, who reiterated the Brean Murray's "buy" rating with a $50 target price, went on to say: "We continue to view the Chinese domestic market as a 'policy market,' and the government will likely use all necessary tools to maintain a stable to slightly upward market in 2008, given the sensitivity surrounding the Beijing Olympics." Dick Wei, an analyst at JPMorgan Securities Inc. in Hong Kong, has an "overweight" recommendation on the stock. S&P gives China Finance shares a positive four out of five star "buy" rating.

    Jitters haven't stopped the Chinese from playing domestic markets. Fueled by 136 million investors, and growing by some 130,000 new investors daily, China's two stock markets briefly eclipsed Japan’s last month as the world's second-largest market in terms of capitalization. Chinese investors opened about 35 million accounts for trading stocks and mutual funds last year, about a seven-fold increase over the number opened in 2006, according to China Securities Depository and Clearing Corp. As incomes increase in China, brokerage accounts will surely follow suit, which will play into the hands of China Finance.

    The company's exclusive partnership with China Telecom lends great longer-term upside potential to JRJC stock. This factor, along with the firm's a strong balance sheet and shares that appear to be deeply undervalued, will likely mean rich rewards for investors willing to weather the current storm.

    On Monday, shares closed at $18.11, a $0.85 rise from the previous trading day and their highest level since mid-January.
  2. jsv416


    stoney- I like your ideas and the info you post. Got some good ideas and stocks to watch via your postings..