Thursday, December 08, 2005

DTAS(13$,long term buy)

DTAS is an online advertising agency, with a business model similar to VCLK,AQNT, and MCHX.

This group has been doing well, given that the trend of advertising dollar migration from offline to online continued.
It is said online advertising spending is up about 33% in 2005 versus 2004. I think the growth rate in this sector will at least maintain current level for the next few years, given that online advertising still accounts for less than 5% of total adverting dollars.


Compared to its peers, DTAS stock did not perform as well. There are a lot of talks about the negative implications derived by the relationship with GM, which contributes about 20% revenue for DTAS. If GM defaults, indeed Digitas has to write down its receivables, taking a hit in short term profit. But I believe first it is hard to say GM is going to die in foreseeable future(that is a billion dollar question by itself), and the negative impact has largely been reflected in Digitas share price. The bottom line is this company is in a red-hot sector, growing revenue 30%+ YoY, and it is much cheaper compared to its peers:AQNT,MCHX,VCLK.

I did not find time to set up a model for earning projection yet, will do so when get time.

I am long DTAS.

Friday, December 02, 2005

CTRP: Maintain Neutral

I am still holding 'Neutral' view to Ctrip.com, though I expect its revenue to increase 30% in 2006, EPS to be up 22% YoY. However, I think Ctrip is close to fully valued at this point. In the past two years, Ctrip has been enjoying a much higher PE multiples than its Chinese Internet peers, going forward I expect the PE multiple to come in line with peers.


CTRP Q305 Report Posted by Picasa

Thursday, December 01, 2005

NCTY Post Q305 Update

WoW did not bad in its first full quarter commercial operation, it brought in 20.4 million revenue, but it was not good enough to satisfy high public expectation, still remember somebody talking about what if even a few percents of 1.3 billion people will play Wow, how much money The9 will make? Unfortunately, business operations are not as easy as adding a few numbers, we got to respect the objective world.

The truth is there was a hell of competition of games in China, there were well over 100 commercial MMORPGs and a few hundred more casual games in operation. Don't believe this? Go to Www.17173.com to take a look. Thus even WoW is a good and popular game, it won't be easy to produce astonishing revenue, say 50+ mil USD per quarter.

However, after the stock retreated to around 14$, I think it better reflects the tradeoff between risk and return. I am upgrading NCTY stock from my previous 'Hold/Sell' rating to 'Hold', with a 12-month target 15$. For Q405, I expect revenue to be around 25.7 mil USD and EPS to be around 23 cents. For 2006, I expect revenue to be between 90 to 110 mil USD, EPS to be between 1.01$ to 1.22$.