Guidance & Visibilty

[madrose1]

Two Underdogs $DANG $RENN and a Hidden Gem $YY from China
http://beta.fool.com/leokornsun/2013/05/08/two-underdogs-and-a-hidden-gem-from-china/33758/?source=eogyholnk0000001


YY Inc.: The Hidden Gem
http://finance.yahoo.com/q/ks?s=YY+Key+Statistics

(float=7mil, 1.56Bil cap, revs= 160mil )

Unlike Renren or Dangdang, social network operator YY Inc. has actually risen nearly 90% since its market debut last November. YY, which has over 300 million users, is a gaming and web-chat platform that allows freelance entertainers to become Internet celebrities. YY members use the website to showcase their talents, such as singing or hosting radio shows, to attract fan followings.

Popular performers then charge their fans fees for playing online games or engaging in activities with them. Fans can also purchase virtual gifts, such as flowers or teddy bears, for their favorite members. The members then earn a cut of the revenue from the purchased products.

This oddball business model has been wildly successful, with first quarter revenues rising 130.5% year-on-year to $51.2 million. Non-GAAP operating income rose 159.9% and gross profit soared 150% to $27.5 million. The company boasted an incredible gross margin of 53.7%, up from 49.5% in the prior year quarter


[img]http://media.ycharts.com/charts/914b6319f27627b18c88ef0f72b3d2bc.pngp/img]

41% of the company’s revenue is generated from its online games, and 35% from its music unit, which showcases live performances and karaoke from its performers. YY’s robust video-chat platform has even attracted over 20,000 teachers in China, who now use the site to offer private lessons ranging from foreign languages to government civil employee entrance exam courses.

YY’s more popular members have been able to earn approximately $19,000 annually, compared to the average Chinese annual salary of $7,000, which makes participation in the site a win-win situation for both the company and its members.

The Foolish Bottom Line

Despite worries of a slowing Chinese economy, the Chinese Internet industry is still one of the most exciting growth markets in the world. While some companies, such as Renren, are still trying to control costs to generate profits, other companies, such as Dangdang, are slowly but steadily carving out a niche in e-commerce. Lastly, oddball companies such as YY prove that Chinese Internet companies don’t necessarily need to be labeled as the “Chinese Facebook or Amazon” to achieve incredible success. These two underdogs and one hidden gem are all risky bets, but each of them have high growth potential if their business models pay off.