I was hoping for more of a sell off in
Sohu.com (SOHU) after Friday's "news" that after an Olympic style bump this year in their advertising business, things would return to more normal in 2009. [
Jun 20: Sohu.com Sees Ad Revenue Slowing in 2009]
Notable Calls blog points out that analysts have rushed to its defense this AM, and the stock is bouncing sharply at least for now. Again, gaming not advertising has provided the spark in this name.
- Citigroup notes Friday's sell-off was sparked by a Reuters article confirming what almost everyone already knew: Sohu will face challenging YoY comps on its brand adv side due to a post-Olympics "hangover" effect. However, the firm believes online gaming will continue to power rev and earnings growth in 2009. They were modeling +18% YoY for 2009 adv revs, so the company's expectations of "+20-30% YoY" is actually stronger than their estimates. Finally, they note that online gaming is highly immune from growing inflationary pressures in China, another positive. Accordingly, the firm raises their 2009E estimate, increases tgt to $90 (from $80), and reiterates Buy rating.
- 2Q tracking ahead of plan; 3Q looks excellent - Citi believes both Adv & Gaming are having a strong quarter, and should come in above company guidance. 3Q is also set to be very strong, especially with Olympics adv, which should benefit from Sohu recently being granted the rights to show live streaming video of all events. Sohu is easily one of the, if not the, fundamentally best positioned names for at least the next 2 quarters.
- Merrill Lynch reits Buy & $95 tgt on SOHU after a massive sell-off on Friday triggered by a report by Reuters on growth of Sohu’s online ad, 40% of revenues in 1Q08, to slow down to 20-30% YoY in 09. Even given a significant US market correction on Friday, they see overreaction to the article. Firm also sees Sina as another victim.
- MLCO believes the company has been communicating the same message (slowdown in ad growth in 09) for a few months. They also believe the range is inline, if notbetter, than most analysts’ estimates. For example, they are looking at 22% growth in online ad only and Bloomberg consensus shows a 23% growth in sales (including games and wireless services).
- Firm believes the focus should be on Sohu’s potential margin expansion in 2009, despite lower topline growth. They expect Sohu to obtain a high-tech status and thus a 15% tax rate for 2009. They are also modeling material operating leverage as they expect the reduction in Olympic-related spending next year, est. to be US$15-20m, to be able to offset most of the increase in operating expenses to support organic growth. They therefore expect net margins to improve to 35% in 09.
Long Sohu.com in fund; no personal position
1 comments:
RE: CX, CEMENT
Sociedad Quimica y Minera de Chile SA
Amil, Banco Macro, Pao de Acucar, Vale: Latin Equity Preview
By William Freebairn and Alexander Ragir
June 17 (Bloomberg) -- The following stocks may have significant gains or losses in Latin American markets. Symbols are in parentheses after company names, and stock prices are from the last session.
The MSCI index of Latin American shares rose 0.6 percent to 4,819.64 yesterday. Markets in Argentina were closed yesterday for a holiday. In Brazil, preferred shares are the most commonly traded class of stock.
Argentina
Banco Macro SA (BMA AF): The fourth-largest lender's American depositary receipts fell 6.3 percent to a record $18.46 in New York yesterday when local trading was closed for a public holiday. Argentine bonds dropped to a six-week low after farmers renewed their strike against the government following the arrest of a farm leader. Government bonds account for an average of 20 percent of banks' assets, according to brokerage Rava Sociedad de Bolsa. Macro rose 1.1 percent to 6.36 pesos.
Telecom Argentina SA (TECO2 AF): American depositary receipts of the country's second-biggest phone company tumbled 6 percent to $16.26 in New York yesterday, the lowest since November 2006. WestLB Mellon Asset Management's Bill Rudman sold Telecom Argentina as he cut Argentine holdings last month to 0.5 percent of the total $3 billion of emerging-market equity he manages, from 2 percent, he said in an interview. Telecom Argentina fell 0.5 percent to 11.05 pesos in Buenos Aires.
Brazil
Amil Participacoes SA (AMIL3 BS): The Brazilian health-care provider agreed to buy a hospital in Brasilia for 8.5 million reais ($5.2 million). The completion of the purchase of Hospital e Clinicas SK Steckelberg Ltda will be announced over the next 60 days, Amil said in a filing on the Web site of Brazil's securities regulator. Amil gained 1.7 percent to 15.25 reais.
Cia. Brasileira de Distribuicao Grupo Pao de Acucar SA (PCAR4 BS): Brazil's biggest food retailer said yesterday that sales at its stores open for more than a year rose 12 percent in May on rising demand for food products and electronics. Net sales in all stores gained 28 percent in May to 1.5 billion reais ($910 million), Sao Paulo-based Pao de Acucar said in an e-mailed statement. Grupo Pao de Acucar rose 0.2 percent to 37.62 reais.
Estacio Participacoes SA (ESTC11 BS): Brazil's biggest administrator of private universities is still ``very attractive'' even after a 22 percent gain over the past month, wrote UBS AG analyst Eduardo Nishio and Rafael Espirito Santo in a note to clients. GP Investments Ltd.'s (GPIV11 BS) stake in Estacio ``will allow the company to deliver faster and deeper turnaround results, while consolidating the sector,'' the analysts wrote. GP Investments, Latin America's largest private equity fund, fell 0.1 percent to 19.29 reais. Estacio rose 1.4 percent to 24.75 reais.
Petroleo Brasileiro SA (PETR4 BS): Brazil's state-controlled oil company may build a refinery in Maranhao to increase production of premium distillates such as low-sulfur gasoline. Petrobras, as the Rio de Janeiro-based company is known, said the refinery in the northeastern state of Maranhao will have capacity to process 600,000 barrels of oil a day, according to a filing posted today on the securities regulator Web site. Petrobras fell 0.2 percent to 45.80 reais.
Cia. Vale do Rio Doce (VALE5 BS): The world's biggest iron- ore producer may have its credit rating raised by Standard & Poor's after the mining company said it plans to raise $14 billion in a share sale. Vale's BBB rating was put on CreditWatch with positive implications, analyst Reginaldo Takara wrote in a note yesterday. The share sale will improve Vale's ``capital structure and financial flexibility, supporting the company's aggressive capital expenditure program and possible acquisitions,'' he wrote. Vale gained 0.2 percent to 46.99 reais.
Chile
Sociedad Quimica y Minera de Chile SA (SQM/B CC): The Santiago-based company was recommended by CNBC ``Mad Money'' host Jim Cramer because of growing demand for lithium and fertilizer. SQM is the world's largest producer of lithium and a ``triple play'' because of Chile's recent economic success and surging demand for lithium and fertilizer, Cramer said. The company has ``got its hands on two fabulous growth areas right now,'' Cramer said. SQM rose 3.7 percent to 23,220 pesos.
Mexico
Cemex SAB (CEMEXCP MM): North America's largest cement maker said second-quarter operating income will gain 19 percent to $960 million after an acquisition. Cemex cut its estimate for 2008 earnings before interest, taxes, depreciation and amortization to $5.3 billion from a forecast in January of $5.6 billion, citing slowing construction spending in the U.S. Second-quarter sales will be more than $6.4 billion, Cemex said in a statement yesterday. Monterrey-based Cemex rose 0.2 percent to 26.67 pesos.
Peru
Southern Copper Corp. (PCU/C PE): The world's seventh- largest copper producer may stop operations at its Peruvian smelter within a week if regional protests continue, Reuters reported yesterday, citing Chief Executive Officer Oscar Gonzalez Rocha. Southern Copper rose 2.6 percent to $105.99.
To contact the reporters on this story: William Freebairn in Mexico City wfreebairn@bloomberg.net; Alexander Ragir in Rio de Janeiro at aragir@bloomberg.net;
Last Updated: June 17, 2008 08:45
Post a Comment