It’s earnings season in China, with a slew of big-name Chinese stocks reporting results in recent weeks, and even more set to report this week.
Among the biggest names that have already doled out details of their latest quarter are e-commerce giant Alibaba (BABA) and medical device marker Mindray Medical (MR). This week, the cadre of Chinese corporations set to report include Internet firm Tencent (TCEHY), local Chinese online merchant 58.com (WUBA) and online gaming and web portal site NetEase (NTES).
For Chinese stocks in general, the recent past has given investors reason to smile. The benchmark measure of large-cap China stocks, the iShares FTSE/Xinhua China 25 Index ETF (FXI), is up 4.8% over the past month, and FXI is up 12% in the past six months. China’s A-shares market also has performed very well of late, with the Deutsche X-Trackers Harvest CSI 300 China A-Shares ETF (ASHR) up 7% in the past month and 23% over the past six months.
Of course, the biggest gains in Chinese stocks (or anywhere for that matter) usually come as a result of a company weighing in with strong revenue and/or earnings. There’s nothing like a big earnings beat to cause traders to pile into a stock, and that’s certainly true for the following trio of Chinese stocks riding high on earnings.
Chinese Stocks — Baidu, Inc. (BIDU)
When you’re the No. 1 Internet search engine in the biggest Internet market in the world, Wall Street tends to notice when you deliver an earnings beat. That’s precisely what happened to Baidu, Inc. (BIDU).
On Wednesday, Oct. 29, the Chinese search giant reported Q3 adjusted EPS of $1.90, firmly above the $1.59, per share analysts were anticipating. The bottom line represents a 27% increase over the same quarter the prior year. Revenue in Q3 also surged, up 52% year over year to $2.2 billion. That metric, however, was slightly lower than expectations.
Baidu cited gains in its mobile search operation for the strong Q3 results, and Wall Street responded by sending the shares to an all-time high. Over the past month, BIDU shares have spiked more than 22%, proof positive that the Chinese Internet star continues to shine.
Chinese Stocks — China Biologic Products (CBPO)
China Biologic Products (CBPO) is the maker of plasma-based disease-fighting biopharmaceutical therapies, therapies which have been in growing demand in China for several years.
On Wednesday, Nov. 5, CBPO reported Q3 EPS of 81 cents, easily besting analysts’ forecasts for a bottom line of just 17 cents. Revenue also was strong, coming in at $68.9 million, a 30% increase over the same quarter last year, and easily surpassing consensus forecasts for $63 million.
The company said strong sales growth in its IVIG product lines, used to fight autoimmune and other diseases, in many of China’s tier-one cities helped boost both the top and bottom lines.
Initial reaction to the strong results was a surge in CBPO shares. The stock gapped down in early Monday, Nov. 10, trade, but since then the shares are back to their winning ways. In fact, over the past month, CBPO has put in a remarkable showing, up 30%. Year to date the stock is up nearly 135%, and those gains are likely to continue if earnings keep coming in like they did in Q3.
Chinese Stocks — YY Inc. (YY)
Chinese social media site YY (YY) also is no stranger to strong earnings, and on Tuesday after the closing bell, YY reported better-than-expected results for the third quarter ended Sept. 30.
YY said it earned 87 cents per share in the quarter, well above the 76 cents per share Wall Street was expecting. That earnings beat represents an 85% year-over-year bottom-line increase.
Revenue in the quarter also was strong, roaring in at $163 million, up 105% over the same quarter a year ago. The metric also blasted past expectations for a top-line showing of $153 million. YY also said it expects the top- and bottom-line Q4 numbers to come in strong.
After selling off about 3% in Tuesday trade, the shares are stabilizing. But even after that modest decline, YY stock has posted an 8% gain over the past month and a 40% surge of the last six months.
As of this writing, Jim Woods did not hold a position in any of the aforementioned securities.