This coming Friday, all the excitement that has been building culminates in the potentially record breaking IPO of Alibaba (NYSE:BABA) . Most retail investors will not be able to invest in BABA at the IPO price due to high demand, but there might be a potential alternative investment that could benefit from the Chinese e-commerce giant IPO. If Alibaba proceeds to have a successful IPO, it could be first step to introducing U.S. investors to China-based stocks that are listed in the U.S.
Not only that, but all three of the companies listed below are China-focused, and have seen rising earnings estimates as of late and could be primed to outperform. In fact, all three have Zacks Ranks of ‘Buy’ or better, making them excellent choices for investors looking beyond the Alibaba IPO for opportunities in today’s market:
E-Commerce China Dangdang Inc. (NYSE:DANG)
This Chinese stock is the most relevant to Alibaba in that it is engaged in operating as a business-to-consumer business providing online shopping in China. Products offered by the Company's website dangdang.com include books, media products, beauty and personal care products, home and lifestyle products, and baby, children and maternity products.
Second Quarter Results
The Chinese e-commerce company reported its Q2 results on August 14. Net revenues for the quarter were $316.1 million, up 31.3% from the same period in 2013. Net Income for the quarter was $4.6 million, or 1.5% of total net revenues, compared with a loss a year ago.
Analysis
We currently have the company as a Zacks Rank #1(strong buy) due to consistent earnings in the past quarters, and strong estimate revisions. DANG has beat earnings estimates by an average surprise of 99.05% in the past year, and 93% of estimates have moved higher for the current quarter up to next year.
China Mobile Hong Kong Ltd (NYSE:CHL)
China Mobile Limited, an investment holding company, provides mobile telecommunications and related services in Mainland China and Hong Kong. It offers voice services comprising local calls, domestic long distance calls, international long distance calls and others.
The company also offers data services, such as SMS, a service to deliver and receive text messages. Further, the company offers telecommunications network planning, design, and consulting services.
First Half 2014 Results
In the first half of 2014, operating revenue was $52.87 billion, up about 7.1% (yoy), of which, revenue from telecommunications services was $48.51 billion, up about 4.7% (yoy). EBITA was about $19.26 billion, down about 4.4% from last year and total customers exceeded 790 million, up about 6.8% (yoy).
The firm maintains a solid customer base. As of the end of June 2014, the Group had over 790 million customers, representing a growth of 23.41 million customers compared with the end of 2013, with a stable retention of middle-to-high-end customers. The Group’s corporate customer business maintained favorable growth momentum with 3.27 million corporate customers in total, while revenue from communication and information services showed rapid growth.
Analysis
We currently have this stock as a Zacks Rank #1(strong buy) and 100% of estimates have moved higher for the current year and next year. Investors should watch and see how CHL invests their $74.25 billion of total cash into products that will return a healthy profit for their investors. Investors should keep a lookout for this resurgent Chinese stock and see if there are any positive impacts from China’s Alibaba IPO.
China Life Insurance Co Ltd. (NYSE:LFC)
China Life Insurance Company Limited is the leading life insurance company in China's life insurance market. The Company provides products and services including individual life insurance, group life insurance, accident and health insurance. The Company is China's largest life insurance company, a leading provider of annuity products and life insurance for both individuals and groups.
First Half 2014
The Company’s total revenue was $39.24 billion, a 2.6% decrease year-over-year; net profit attributable to equity holders of the Company was 2.99 billion, a 13.6% increase year-over-year; and earnings per share (basic and diluted) were $.11, a 13.6% increase year-over-year. New business value for the six months ended 30 June 2014 was $2.2 billion, a 6.9% increase year-on-year. The Company’s market share in the first half of 2014 was approximately 25.7%, maintaining a leading position in the life insurance market in China.
Analysis
We currently have this life insurance company as a Zacks Rank #2(buy). According to the Zacks consensus estimate, 100% of analysts have upgraded their earnings estimate revisions for the current year as well as next year. We also have the company’s industry in the top 25%, suggesting it is in good company as well.
As China’s leading Life Insurance distributor, it shares a similar quality with Alibaba with having a majority stake in their respective industry so we will have to see how Alibaba and China Life do in the upcoming quarter.