Chinese Internet Companies
A number of Chinese Internet companies are outpacing the rest of the market
higher with Netease (NTES) reaching a new 52 week high at the highest point
today. Other companies to watch include Shanda (SNDA), Baidu (BIDU) and Sina
Online gaming in China is very much growing with a 63% increase in revenue in
2008 compared to the revenue generated in 2007. The big two China gaming
companies are Netease and Shanda with Netease's Fantasy Westward Journey being
the most popular online game in the country. Baidu is a search company, the
Chinese Google, while Sina is a combination of five different online companies
with a focus on media. The companies each saw revenue for the past year in the
range of $370 million to $522 million.
Netease has a current price/earnings ratio around 30 while the revenue for
the year is growing at 18% and the earnings expanding at a rate of 12%. If you
feel there is clear earnings growth beyond the current 12%, NTES could be a
decent China play for your portfolio. Analyst are pushing their estimates higher
to a small degree which bodes well for some contained price action higher.