Stock Alert for E-Commerce China Dangdang Inc. (DANG)
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    Stock Alert for E-Commerce China Dangdang Inc. (DANG)

    E-Commerce China Dangdang Inc. (NYSE: DANG) is a business-to-consumer e-commerce company in China. On its Web site dangdang.com, the Company offers more than 670,000 books and other media products as well as selected general merchandise products including beauty and personal care products, home and life style products, baby, children and maternity products, apparel, digital and electronics products. It also operates the dangdang.com marketplace program, which allows third-party merchants to sell their products alongside products sourced by the Company. DANG’s nationwide fulfillment and delivery capabilities, high-quality customer service support and scalable technology infrastructure enable it to provide a compelling online shopping experience to customers

    Share Statistics (28-Oct-11) FY2009 FY2010 % Chg Q22010 Q22011 % Chg
    Symbol DANG Revenue, $CNY 1,457.65 2,281.68 56.5% 515.68 790.78 53.3%
    Current price $7.37 Gross marg. 22.0% 21.0% -4.5% 19.1% 12.3% -35.6%
    52wk Range: $4.50-$36.40 Oper. margin 0.7% -6.6%
    Avg Vol (3m): 2,414,100 Net margin 1.2% 1.3% 8.3% -3.4% -3.6% 5.9%
    Market Cap. 583.06M
    Shares Outstanding 79.15M EPS, $ 0.00 0.02 -0.11 -0.07 -36.4%

    Source: Reuters.com, SEC Filings.

    Investment Highlights

    Shares of DANG jumped as much as 24% to $7.50 on Friday, with volume of 3.54 million shares traded.  Over the last 52-weeks, the stock has reached a low of $4.50 and a high of $36.40. The stock is currently trading above its 50-day moving average of $5.90 and below its 200-day moving average of $12.31.

    Shares in the Chinese business-to-consumer e-commerce company have gained 37.0% in the last five days and 40.4% in the last month, though the stock dropped 67.8% in the last six months.

    The Company last month said it started the operation of its Wuxi fulfillment center in late August, bringing its total warehouse space to 260,000 square meters currently from 210,000 square meters at the end of the second quarter.

    DANG intends to open two additional fulfillment centers, one in Fuzhou of Fujian province and the other one in Jinan of Shandong province, in the fourth quarter of 2011, to further increase its fulfillment capacity. The Company also said it continues to improve the delivery services by further shortening the delivery time. As of last month, the Company offers same-day-delivery services in 17 cities and the next-day-delivery services in 72 cities in China.

    Source: http://ir.dangdang.com/phoenix.zhtml?c=241200&p=irol-irhome

    Financial Summary

    DANG reported total net revenues of RMB790.8 million ($122.3 million) in the second quarter of 2011, a 53.3% increase from the corresponding period in 2010.

    Media product revenue for the quarter was RMB584.2 million ($90.4 million), representing a 34.1% increase from the corresponding period in 2010. General merchandise revenue was RMB191.5 million ($29.6 million), a 151.9% increase from the corresponding period in 2010. Other revenue including revenue from third-party merchants was RMB15.1 million ($2.3 million), a 288.9% increase from the corresponding period in 2010.

    The Company recorded an operating loss of RMB52.2 million ($8.1 million) for the quarter, as compared with an operating loss of RMB17.1 million for the same period in 2010, primarily due to the decrease in gross margin. Net loss was RMB28.4 million ($4.4 million), representing a 60.0% increase from the corresponding period last year.

    For the third quarter of 2011, DANG expects total net revenues to be in the range of RMB916 million to RMB928 million, representing year-over-year growth in the range of 51% to 53%. This forecast reflects the Company’s current and preliminary view, which is subject to change.

    Source: http://ir.dangdang.com/phoenix.zhtml?c=241200&p=irol-newsArticle&ID=1596804&highlight=

    Financial Strength (28-Oct-2011)

    Company

    Industry

    Sector

    S&P 500

    Quick Ratio (MRQ) 1.16 2.12 1.99 0.63
    Current Ratio (MRQ) 1.83 2.72 2.55 0.97
    LT Debt to Equity (MRQ) 0.00 9.52 11.63 98.39
    Total Debt to Equity (MRQ) 0.00 15.69 20.44 138.72
    Interest Coverage (TTM) 0.97 1.40 19.44

    Source: Reuters.com, SEC Filings.

    Technical Analysis

    Source: http://stockcharts.com

    DANG is above the upper Bollinger Band, implying that it is currently extended from its recent trend. Be aware, however, that a cross outside of the Bollinger Bands can sometimes be a signal of trend strength and not, necessarily, trend reversal.

    DANG’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
    Oct28-2011 symbol Share, $ $ Mn 2011 2012 2011 2012
    Amazon.com Inc. AMZN 216.30 98.19B 110.92 68.02 2.01 1.52
    eBay Inc. EBAY 33.12 42.76B 16.56 14.34 3.70 3.14
    Catalog & Mail Order Houses Median       22.13 n/a 0.53 n/a
    E-Commerce China Dangdang Inc. DANG 7.42 587.27M n/a n/a n/a n/a

    Source: Thomson Financial

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