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    Stock Alert for E-House (China) Holdings Ltd. (ADR) (EJ)

    E-House  (China) Holdings Ltd. (EJ) is a real estate services company in China with a nationwide network covering more than 160 cities. It offers a wide range of services to the real estate industry, including primary sales agency, secondary brokerage, information and consulting, online, advertising, promotional events and investment management  services.  The  real  estate  information  and  consulting,  online,  advertising  and promotional events services are offered through the Company’s majority owned subsidiary, China Real Estate Information Corp. (CRIC).

    Share Statistics (22-Aug-11) FY2009 FY2010 % Chg Q12010 Q12011 % Chg
    Symbol EJ Revenue, $Mn 299.54 356.53 19.0% 71.44 83.28 16.6%
    Current price $6.82 Gross marg. 76.2% 64.8% -15.0% 72.5% 67.0% -7.6%
    52wk Range: $5.52-$20.14 Oper. margin 14.9% -2.8%
    Avg Vol (3m): 492,522 Net margin 33.5% 10.1% -69.9% 14.9% -0.6% -104.0%
    Market Cap. 548.44M
    Shares Outstanding 80.42M EPS, $ 1.24 0.43 -65.3% 0.13 -0.01 -107.7%

    Source: Reuters.com, SEC Filings.

    Investment Highlights

    Shares of EJ traded as much as 17.2% higher Monday on volume of over 703K shares.  Over the past 52 weeks, the stock has traded between $5.52 and $20.14.

    Shares of the real estate services company has dropped 4.08% in the last week; 18.35% in the last month; and 56.76% year-to-date.

    EJ slipped $0.32 to $6.34 on Wednesday last week despite posting earnings that meet expectations and giving investors an upbeat third-quarter outlook.

    The Company posted total revenues of $91.6 million for the second quarter of 2011, an increase of 29% from $71.2 million for the same quarter of 2010.

    Second quarter revenues from primary real estate agency services were $33.2 million, an increase of 4% from $31.9 million for the same quarter of 2010. This increase was mainly due to a 25% increase in total GFA of new properties sold and a 38% increase in total transaction value of new properties sold, partially offset by a decrease in the average commission rate from 1.2% for the second quarter of 2010 to 0.9% for the same quarter of 2011. Revenues from secondary real estate brokerage services were $5.3 million, an increase of 10% from $4.8 million for the same quarter of 2010. This increase was mainly due to increases in the average unit selling price and total transaction value of secondary real estate sold.

    Second quarter revenues from EJ’s CRIC subsidiary were $52.8 million, an increase of 56% from $33.8 million for the same quarter of 2010. This was mainly attributable to a 116% year-on-year increase from $14.3 million to $30.9 million in revenues from CRIC’s online segment as a result of both growth in real estate online advertising and gains in CRIC’s market share.

    Second quarter net loss attributable to EJ shareholders was $6.7 million, or $0.08 loss per diluted ADS, compared to net income of $6.7 million, or $0.08 per diluted ADS, for the same quarter of 2010. Second quarter non-GAAP net income came in at $2.3 million, or $0.03 per diluted ADS, a decrease of 83% from $13.9 million, or $0.17 per diluted ADS, for the same quarter of 2010.

    Analysts, on average, expected the Company to report adjusted earnings of $0.03 ADS for the quarter.

    “During the second quarter, our strong project execution led to strong buyer interest and sales volume for many of our projects,”  commented Xin Zhou, E-House’s executive chairman.  He noted, however, that as the Chinese central bank continued its credit tightening, commercial banks in China have further slowed down approvals of new mortgage loans. “This has resulted in ongoing delays in our ability to recognize successful sales and commission revenue for a number of projects for which a ‘successful sale’ is defined as when the bank releases mortgage loan proceeds. This has negatively impacted our primary agency revenue for the second quarter and may continue to negatively affect our revenue for the second half of 2011,” Zhou said.

    As of June 30, 2011, EJ had a total of 112 secondary real estate brokerage stores in eight cities in China, compared to 131 stores as of June 30, 2010 and 133 as of December 31, 2010. The Company closed a number of stores in Shanghai during the first half of 2011 in order to reduce cost and optimize its store network by strengthening its presence in certain districts while closing unprofitable stores in others.

    Revenue for the third quarter is expected to be in the range of $108 to $110 million, versus analysts’ expectations of $100.4 million.

    Source: http://www.ehousechina.com/ny.asp?ID=253http://www.reuters.com

    Financial Strength (22-Aug-2011)

    Company

    Industry

    Sector

    S&P 500

    Quick Ratio (MRQ) 1.19 0.34 0.75
    Current Ratio (MRQ) 6.90 1.64 0.62 1.10
    LT Debt to Equity (MRQ) 24.37 70.84 111.90
    Total Debt to Equity (MRQ) 52.18 158.70 151.41
    Interest Coverage (TTM) 0.01 0.28 23.17

    Source: Reuters.com, SEC Filings.

    Analyst Consensus

    This is the consensus forecast among eight polled investment analysts. Against the E-House (China) Holdings Ltd company.

    Analyst Detail

    Buy

    Outperform

    Hold

    Underperform

    Sell

    No Opinion

    Latest 3 1 4 0 0 0
    4 weeks ago 3 1 3 0 1 0
    2 months ago 3 1 3 0 1 0
    3 months ago 3 1 4 0 0 0
    Last year 4 1 1 0 0 0

    The seven analysts offering 12-month price targets for EJ have a median target of 13.00, with a high estimate of 17.00 and a low estimate of 8.50. The median estimate represents a 110.36% increase from the last price of 6.18.

    Source: markets.ft.com

    Consensus Estimates Analysis

    # of Estimates

    Mean

    High

    Low

    1 Year Ago

    SALES (in millions)
    Quarter Ending Sep-11 4 101.82 110.20 78.30 101.43
    Quarter Ending Dec-11 4 137.25 148.10 124.81 121.85
    Year Ending Dec-11 8 412.70 429.80 391.51 437.22
    Year Ending Dec-12 8 523.94 573.50 466.60 574.62
    EARNINGS (per share)
    Quarter Ending Sep-11 3 0.11 0.14 0.10 0.28
    Quarter Ending Dec-11 3 0.29 0.32 0.27 0.38
    Year Ending Dec-11 7 0.56 0.72 0.48 1.24
    Year Ending Dec-12 7 0.89 1.13 0.70 1.62
    LT Growth Rate (%) 3 32.13 53.90 12.50 30.98

    Technical Analysis

    Source: http://stockcharts.com

    EJ is below its 20-day moving average. This bearish sign is even more significant because the moving average is also trending lower.

    EJ is within its Bollinger Bands. This is a normal condition suggesting that it is neither overbought nor oversold relative to the recent levels.

    EJ’s MACD is currently indicating a weak bullish signal. Although the MACD is trending above the signal line, the indicator is still below 0, which suggests that the underlying moving averages are bearish.

    Comparative Analysis

    Company Name Ticker Price per Mrkt. Cap. P/E P/S
    Aug22-2011 symbol Share, $ $ Mn 2011 2012 2011 2012
    CB Richard Ellis Group Inc. CBG 13.78 4.38B 12.76 9.19 0.72 0.63
    Jones Lang Lasalle Inc. JLL 61.79 2.68B 13.09 10.16 0.76 0.67
    Sohu.com Inc. SOHU 69.57 2.66B 14.87 12.08 3.18 2.56
    Property Management Median       20.27 n/a 4.01 n/a
    E-House (China) Holdings Ltd. (ADR) EJ 6.82 548.44M 10.49 6.75 1.33 1.06

    Source: Thomson Financial

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