eLong Sparks Chinese Internet Rally (LONG, EXPE, CTRP, SINA, RENN, SNDA, CYOU, SOHU)
Shares of Chinese travel booking Web site eLong (LONG) are surging 53% on news that Chinese Internet giant Tencent will take a 16% stake in the company that is Expedia’s (EXPE) Chinese operation. The move by Tencent makes it the second-largest eLong shareholder. Expedia, the world’s largest online travel company, also boosted its eLong stake to 56% by purchasing an additional 8 million shares. Expedia paid $41.2 million for those shares while Tencent paid $84.4 million for its eLong stake.
On an otherwise glum day for the broader market, the eLong news has the Chinese Internet Stocks Index soaring 3.2%. eLong has 7.3% of the Chinese online travel market compared to Ctrip.com Intl’s (CTRP) 47.3% market share, according to iResearch. Brean Murray boosted its price target on eLong to $20 from $17 on the Tencent news.
eLong also reported that its first-quarter profit rose to $1.2 million from $900,000 as revenue surged 23% to $19 million from $14.8 million. The company said it expanded its domestic hotel network by 71% to 19,200 hotels.
Shares of SINA (SINA) are up 2% after Stifel Nicolaus raised its price target on the stock to $140 from $130, implying substantial upside from where the shares currently trade. Stifel Nicolaus says Sina is adding 667,000 Weibo users per day and that the company is on track to exceed 275 million users of the microblogging service by the end of this year, well above previous estimates of 220-250 million.
Investors can track the Chinese Internet Stocks Index for performance trends and a suite of other metrics at tickerspy.com.
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Investing In China Travel Stocks (Invest2Success, 2/14/11)
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