Briefing.com on KONG China small cap
Thoughts on Small Cap Investing.
Updated as opportunities present themselves. Archive
Updated: 08-Oct-04 09:14 ET
Small Cap Trading: Changing of the China Guard
[BRIEFING.COM -- Robert J. Reid] Buy interest in Chinese Internet stocks had seemingly come and gone after triple-digit moves attracted sell-side research and the stocks eventually breaking down following a string of mishaps (e.g., China Mobile crack-down on wireless spam). However, after watching names like SINA appreciate more than 800% in less than a year, traders/investors have come back for a new round of Asian technololgy stocks. This time, the focus seems to be on companies that aren't coming in with a lot of baggage -- recent initial public offerings. Recent volume surge and price advance in this group leads us to highlight some of the names that have been finding buy interest. The purpose here is to present the stories of a few select names, so that our readers are familar with the stocks should the recent rally continue.
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KongZhong (KONG)
* The co is a provider of 2.5G wireless interactive entertainment (games, pictures, karaoke, electronic books), media (news, sports etc.) and community services (chat, message boards) to customers of China Mobile, which has the largest mobile subscriber base in the world.
* It posted sales of $7.8 mln in 2003, but posted $7.1 mln just in Q1 this year.
* The co is profitable with healthy net margins.
* A possible concern is that on Aug 18, China Mobile found one of KongZhong's interactive voice response services contained "inappropriate content", and suspended approval of new applications for new products and services on all platforms, as well as all joint promotions, until year's end.
* However, keep in mind that CHINA, SINA, SOHU all have received sanctions.
* KONG is up 40% since the announcement. Key will be to get above $10 offering price.
