Courtesy of Benzinga
E Commerce China Dangdang Inc (NYSE: DANG) shares are soaring in pre-market trading, gaining more than 8% to $22.00 after the company reported better than expected earnings.
Dangdang, known as the “Chinese Amazon,” reported earnings of 1 cent per share on revenues of $105 million. Wall Street had been expecting a breakeven quarter on $103.37 million in revenues.
I am pleased to report strong first quarter results. In a highly competitive environment we managed to grow revenues in the first quarter of 2011 by 53.4% year-over-year. General merchandise grew at an accelerated pace compared with last fiscal year. We continue to strengthen our market leadership in media and increase our market share in general merchandise in the first quarter of 2011,” said Ms. Peggy Yu Yu, Dangdang’s Executive Chairwoman.
“We continue to focus on improving our customers’ shopping experience, from browsing our websites to receiving the goods”, commented Mr. Guoqing Li, Dangdang’s Chief Executive Officer. “We provide our customers with competitive pricing and expanded product offerings, recently working on test-launching apparel in the second half of 2011. We have also accelerated our delivery speed by launching our “Lightning Plan” to provide same-day delivery service in seven major cities in China.”
Dangdang expects its total net revenues in the second quarter of 2011 to be in the range of RMB779 million to RMB789 million, representing year-over-year growth in the range of 51% to 53%.
The company, which went public late in 2010, has had a rocky start since going public. The company’s shares soared, as investors bid up all things Chinese Internet, then fell precipitously since the quiet period ended earlier this year. The company’s Chairman went on a profanity laced tirade accusing the investment bankers of mispricing the IPO, and just recently, he lashed out at the Wall Street Journal.
Despite all the negative headwinds, there are still many strong fundamental factors going for DANG as the company continues to grow. The company is operating in a country where many people still do not shop online. It’s competitors have been the subject of fraud, for selling pirated products. It also has first mover advantage. If Dangdang can continue to grow its revenues sharply, then investors should be rewarded handsomely over time.
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