Analysts at BofA Merrill Lynch have raised the price target on E-Commerce China Dangdang (DANG) to $23 from $14 citing Marketplace and efficiency initiatives. It reiterated its Buy rating on the stock.
“We raise our PO to $23 (from $14) on the back of a better understanding of co.’s new initiatives to drive marketplace expansion and to enhance fulfillment efficiency to support long term outlook, post our 4Q13 results note published on Feb 27.” BofA Merrill Lynch said in a note to clients.
“Contrary to consensus estimates that Dangdang will turn loss making again in 1H14, we expect it to remain profitable with 0.3%/1.0% net margin in 1Q/2Q14E. Hence, we raise our 2014/15E sales by 8%/29% and EPS by 1/40%. The valuation implies 1.1x our 2015E P/sales ratio and 32x P/E, which is at a discount to its peers’ 2.0x 2015E P/sales and 45x 2015 P/E.” it added.
Shares of E-Commerce China Dangdang (DANG) closed at $16.65 on Monday.
March 10, 2014, 1:35 P.M. ET
21 Vianet: 2014 Guidance Conservative, JP Morgan Raises TP
By Shuli Ren
Last Friday, shares of Chinese data center service provider 21 Vianet (VNET) slumped 3.6% after the company reported solid fourth-quarter earnings but guided light 2014 self-built cabinet additions.
Well, the management’s guidance was too conservative, said J.P. Morgan analysts Lucy Liu, Michelle Wei, and James R. Sullivan:
2014 guidance leaves room to beat, in our view. The company aims to add 10K cabinets in 2014 with a stabilized utilization rate above 70%. Two-thirds of capacity will be added in Northern China with a 30% price premium, and 25% of the whole year’s supply has been pre-ordered, according to the company. Cloud is guided to contribute 10%+ of total revenue and 20% of EBITDA in 2014. We think upside to guidance will come from enterprise initiatives, expanding MNS to VPN, etc., and a better run rate of cloud computing.
In addition, 21 Vianet has started working with Huawei Technologies, a big client:
Huawei strategic agreement to help execution. VNET has engaged Huawei in three big data centers to be deployed in 2014 using its “module” solution, which helps to shorten construction time by six months. We view this as a key to the company’s deliverables in a heavy investment year.
The J.P. Morgan analysts expressed confidence in 21 Vianet’s execution by raising their price target from $27 to $35:
While we still expect a further multiple increase attributable to scarcity value, continuous high growth generation and an inflated comp multiple, we are more optimistic on the company’s execution, helped by the agreement with Huawei (to shorten construction lead times by six months) and the addition of new business initiatives. We have rolled our PT to Dec-15 and to US$35, based on 13x EV/EBITDA for hosting/MNS and 20x for cloud.