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E-Commerce China Dangdang Inc. Message Board

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  • rogerabc100 rogerabc100 Jul 15, 2011 1:24 AM Flag

    7 rational reasons to own DANG

    Analysis Report

    Gene Munster, a managing director at Piper Jaffray, agreed. Despite the concerns, his firm remains positive on the company, maintaining an "overweight" rating.

    “Dangdang is well positioned to capitalize,” said Munster in a recent research note. “The company continues to pursue its strategy of investing to improve the customer experience, which we believe will lead to more repeat buying, more loyal customers, and lower marketing costs over time.”

    Dangdang’s major pre-IPO shareholders included Tiger Global, DCM Capital and IDG Technology Ventures, according to Renaissance Capital. Together they held about 30 percent of Dangdang’s total shares post-IPO.

    Co-founders still hold about one-third of the company, Bard said. “They are unlikely to sell any material amount near-term given that they already sold some stock on the IPO.”

    Bard said the more likely scenario is that the company owners will wait to announce a structured follow-on offering, although the current stock price, below the IPO price, makes them likely to wait.

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    • - DANG sold off because insider lockup period ended on June 6th.

      - Dangdang is growing sales by 4-5% a month. Sales are probably up well over 20% just since March - April.

      - Valuation of DANG is just too cheap. The huge website traffic, huge reputation, addition of 5M customers a quarter, logistics, warehouses, inventory, processes, etc all make DANG very valuable.

      - Funds and large investors new about the lockup ending on June 6th and they sold off positions before June 6th to get in front of the selling.

      -Funds that were interested in DANG very likely held off on purchases because of the lockup. Now is the time for funds to accumulate at tiny market cap of $900M

      - As DANG starts moving up aggressively the people with over 5 million shares short will be forced to cover fast

      - DANG is now basing around $11 and soon will be breaking out .

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