Earnings Look Up For Jiayuan, AutoNavi 世纪佳缘和华谊兄弟为当前财报季带来些许亮光
I’ve spent most of the current earnings season writing about the bleak picture for many companies, which have seen their profits drop as the country’s economy slows. So I thought it would be nice to take a break from the downbeat news and look at a few smaller companies that have just issued more upbeat reports, including online dating site Jiayuan.com International (Nasdaq: DATE), navigation software specialist AutoNavi (Nasdaq: AMAP) and movie producer Huayi Brothers (Shenzhen: 300027). All 3 of these firms have just posted fourth-quarter results that show improving top and bottom lines, underscoring that there are still some bright spots for investors in China’s difficult economic climate.
Each of these companies has a different story to tell, but perhaps one underlying theme is that they are all are in rapidly developing areas where growth is easier to find than more mature sectors. Equally important, all 3 of these companies are relatively small, meaning its easier for them to grow than for more mature names like online search leader Baidu (Nasdaq: BIDU) and dominant wireless carrier China Mobile (HKEx: 941; NYSE: CHL). At the same time, however, these companies are often more vulnerable due to their relative lack of diversity, which means that their growth can quickly reverse if a new product is a dud or an existing product nears the end of its lifespan.
All that said, let’s take a look at these 3 companies and their latest results, starting with Jiayuan, which swung into the profit column with earnings of 17.2 million yuan in the fourth quarter after posting a net loss a year earlier. (Chinese article) The company also saw its revenue rise 25 percent to 110 million yuan. Investor applauded the results by bidding up Jiayuan shares 1.3 percent after the news came out. But the stock is still trading at just half of its IPO price from about 2 years ago, following a prolonged period of negative investor sentiment for money-losing Chinese Internet companies.
Meantime, AutiNavi has reported its fourth-quarter profit rose 23 percent to $8.7 million, as revenue rose by a similar amount to 43.6 million. (earnings announcement) In this case, AutoNavi is benefiting from the recent rapid growth in China’s car and Internet markets, which are driving demand for location-based services to help drivers and web surfers navigate the the nation’s rapidly changing street maps. Again, investors gave a positive greeting to the report, bidding up AutoNavi’s shares by more than 4 percent in regular and after hours trade.
Lastly there’s Huayi Brothers, which has seen its fortunes soar recently on the huge success of its current film “Journey to the West: Conquering the Demons”, which looks set to break China’s box office record for the best earning movie of all time. (previous post) Huayi reported its 2012 profit rose nearly 20 percent to 242 milliion yuan, with revenue climbing 55 percent to 1.4 billion yuan. Those strong results didn’t even include sales or profits from “Journey”, which was released this month during the Chinese New Year holiday. Huayi’s shares were largely unchanged in early Thursday trade in Shenzhen, but perhaps because they’re up 25 percent since late January following the strong showing for “Journey”.
I’ll admit I don’t know too much about these 3 companies, and am largely writing about them because they offer some rare positive growth stories in an otherwise downbeat earnings season. But from a big-picture perspective, all 3, especially AutoNavi and Huayi, do seem well placed to enjoy strong future prospects due to their leading positions and expertise in fast-growing sectors.
Bottom line: Smaller companies like Huayi Brothers and AutoNavi could be interesting investment alternatives in the current climate where bigger names are having trouble finding new growth.
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