For Immediate Release
Chicago, IL – September 11, 2015 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Yingli Green Energy Holding Company Limited (YGE), JD.com, Inc. (JD), Qihoo 360 Technology Co. Ltd. (QIHU), Alibaba Group Holding (BABA) and SINA Corporation (SINA).
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Here are highlights from Thursday’s Analyst Blog:
China Stock Roundup
Markets experienced a mixed week with government intervention and economic data determining stock movements. Speculation that the government had stopped making share purchases led to losses for the benchmark index on Monday. Stocks finished in the green on Tuesday, following indications that the government had made share purchases to boost stocks.
Stocks gained again on Wednesday following expectations that further stimulus measures would be introduced to support the economy. The benchmark index declined on Thursday after a slump in producer prices triggered fears that the economic slowdown would intensify.
Yingli Green Energy Holding Company Limited (YGE), or Yingli Solar, reported an operating loss of 53 cents per American Depository Share (“ADS”) in second-quarter 2015, much wider than the Zacks Consensus Estimate of a loss of 21 cents. JD.com, Inc. (JD) said it plans to buy back ADSs worth $1 billion over the next 24 months.
Last Week’s Developments
Markets on the mainland were closed on Thursday and Friday on account of the major military parade to commemorate the WWII victory. Hong Kong’s exchange was also closed on Thursday because of a holiday.
Mainland stocks declined to their lowest level in two years in Hong Kong on Friday. Losses were triggered by speculation that shares listed on mainland exchanges will fall following the resumption of trading on Monday.
The Hang Seng China Enterprises Index slumped 1.4%, losing 6% over last week. The index sank to its lowest point since Jul 2013. The Hang Seng lost 0.5%. At that point, the H-share index had nosedived 23% for the year. Its losses were only second to Peru’s benchmark.
Markets and the Economy This Week
The Shanghai Composite moved down 2.5% on Monday, marking the fourth successive day of losses. Speculation that funds supported by the government had stopped making share purchases led to the decline. Prior to this, large cap stocks had gained during the last trading session following speculation that the government was intervening in the markets ahead of last week’s major military parade.
However, small cap stocks gained following a statement from the central bank’s governor that the stock market rout was nearing its end. Speaking at a G20 gathering, the governor said that government stimulus had stemmed the equity market rout and dampened systemic risk. The ChiNext rebounded from its lowest level in seven months to gain 2.1%.
On the other hand, the SSE 50 declined after gaining 17% over six days. The CSI 300 lost 3.4%. The Hang Seng moved down 1.2%. The Hang Seng China Enterprises Index declined to its lowest point in two years, losing 0.7%.
Late on Monday, authorities said that shareholders holding stocks for more than a year would not have to pay personal income tax on dividends. Only a few hours earlier, China’s major exchanges revealed plans to introduce another measure aimed at curbing volatility. The measure would involve suspension of trading if the CSI 300 experiences large swings.
China’s stock markets finished in the green for the first time in five days on Tuesday. The Shanghai Composite Index gained 2.9% with the lion’s share of gains coming during the final hour of the trading day. This is characteristic of recent market behavior where the government steps in to put equity markets in order. Earlier, the benchmark index had lost nearly 2.3% at one point.
Government intervention was triggered by markedly weak trade data. In August, exports dropped 5.5% year over year in dollar terms. Meanwhile, imports declined 13.8% in dollar terms.
The CSI 300 increased 2.6%. The Hang Seng increased 3.3%, recovering from its lowest level in two years. The Hang Seng China Enterprises Index surged 4.1%, notching up its second gain over 17 trading sessions.
Late on Tuesday, the Ministry of Finance said the pace of important construction projects will be increased. Additionally, the government will rationalize debt management at the local government level and undertake tax reforms.
Additionally, two railway projects, which together amount to around $70 billion received approval. Meanwhile, an official document revealed that reforms of government owned companies would be fast tracked.
The benchmark index gained for a second successive day on Wednesday, increasing 2.3%. For every stock that declined, 30 stocks gained. Small cap stocks led gains following expectations that further stimulus measures would be introduced by the government to support the economy. The small-cap heavy ChiNext surged, gaining 3.5%.
Market watchers speculated that additional measures would be implemented by the government to boost the markets and the economy. While large cap stocks were in a relatively comfortable position, small and mid-cap stocks require significant support. The CSI 300 increased 2%. The Hang Seng China Enterprises Index advanced 5.2% while the Hang Seng gained 4.1%.
Stocks declined on Thursday with commodity stocks leading losses. The Shanghai Composite Index declined 1.4%, ending a 5.3% gain made over two days. A slump in producer prices triggered fears that the economic slowdown would intensify. The index for producer prices moved down 5.9% in August. This is the 42nd straight month during which the index has suffered declines. Meanwhile, the consumer price index gained 2%, the highest increase in a year.
Market watchers opined that some amount of profit taking was happening. Additionally, the PPI reading indicated that the economy would require further stimulus. The CSI declined 1.2%. The Hang Seng lost 2.5% while the Hang Seng China Enterprises Index moved down 2%.
Stocks in the News
Yingli Green Energy Holding Company Limited, or Yingli Solar, reported an operating loss of 53 cents per American Depository Share (“ADS”) in second-quarter 2015, much wider than the Zacks Consensus Estimate of a loss of 21 cents. Reported loss was also wider than the 25 cents per ADS loss incurred a year ago.
Total revenues of $438.1 million declined 20.3% from $529.5 million in second-quarter 2014. The downside was mainly due to lower PV module shipments. Yingli Solar’s revenues also missed the Zacks Consensus Estimate of $501 million.
For the third quarter, Yingli Green expects PV module shipments in the range of 550–580 MW. For 2015, the company has revised the PV shipment guidance to 2.5–2.8 gigawatts (“GW”), down from the earlier projection of approximately 3.6 GW.
In a separate development, Yingli Solar has formed a joint venture (“JV”) with West Africa-based leading renewable energy solutions developer, Namene Energy International Limited.
The JV − Yingli Namene West Africa Limited – targets to build a total of 100 megawatts (“MW”) of utility-scale solar projects and up to 50 MW of commercial rooftop projects in Ghana as well as neighboring countries in the coming years. This 50-50 JV will give preference to Yingli Europe as its solar panel supplier.
Headquartered in Accra, Ghana, Yingli Namene West Africa’s first utility-scale projects are already on track, with construction expected to begin in 2017.
JD.com, Inc. said it has received authorization from its Board for a share repurchase program. The company plans to buy back ADSs worth $1 billion over the next 24 months.
The timing of the repurchases will depend on the prevailing market conditions and other corporate considerations. The direct sales company plans to use its existing cash balance to fund the buyout.
In a separate development, JD.com said it was entering into a strategic partnership with South Korea’s Lotte.com. The agreement will enable customers of JD.com to buy products from Lotte via its JD Worldwide cross-border e-Commerce platform.
Qihoo 360 Technology Co. Ltd. (QIHU) is seeking to terminate its joint venture deal with China-based smartphone manufacturer Coolpad Group Limited. As per Qihoo, it has issued a notice to Coolpad wherein it intends "to exercise its put option to require Coolpad to purchase the company's entire 49.5% stake in Coolpad E-Commerce Inc.”
The put option, as per the agreement, was exercisable if Coolpad breached non-compete obligations under the shareholders agreement. With several breaches on part of Coolpad, management at Qihoo issued the notice to the latter. The price of the stake buyout, as per the deal, would be twice that of its fair value.
In Dec 2014, Qihoo 360 and Coolpad set up Coolpad E-commerce, a joint venture, to manufacture mobile devices for the local market. Initially, Qihoo had purchased 45% of the stake for $409.05 million but later it increased its stake to 49.5%.
As per an analyst, Coolpad’s growing affiliation with rival LeTV following an 18% stake buyout by the latter in Jun 2015 was the main source of contention.
Alibaba Group Holding (BABA), China’s e-Commerce giant led by billionaire Jack Ma, recently launched Alibaba Sports Group along with SINA Corporation (SINA) and Yunfeng Capital to reform the country’s sports industry via the Internet.
According to Alibaba Group CEO Daniel Zhang, who will also become the chairman of Alibaba Sports Group, “Alibaba Sports Group aims to transform the China sports industry through the use of Internet-based technologies to bring greater and better products and services to consumers, sports participants and sports fans alike.”
Former vice president of Shanghai Media Group, Zhang Dazhong, will be the CEO of Alibaba Sports Group.
The company also stated that this group aims to combine e-Commerce with media, marketing, video, home entertainment, cloud computing and other Internet-enabled technologies. This will build a sports platform catering to the various facets of the professional sports industry, like sports copyrights, sports media, events and ticketing.
Per the statement, majority of the business will be held by the Alibaba Group, though financial details have not been disclosed.
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YINGLI GREEN EN (YGE): Free Stock Analysis Report
JD.COM INC-ADR (JD): Free Stock Analysis Report
QIHOO 360 TECH (QIHU): Free Stock Analysis Report
ALIBABA GROUP (BABA): Free Stock Analysis Report
SINA CORP (SINA): Free Stock Analysis Report
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