Picked up Some XFML

I originally thought I should wait some time before jumping in on Xinhua Finance Media (XFML). Well, I did wait, but not for long. Around 3:00 pm yesterday when I saw the stock lost almost two dollars to around $11 per share from its open price, I placed an order and bought 360 shares XFML at $11.10, not exactly the lowest point of the day, but not far from it either. The stock eventually close at $11.35, slightly higher than the price I paid.

So far I have bought two Chinese IPO stocks. China Life (LFC) is specticular while GreenTech (GRRF) is a disappointment. For Xinhua Finance Media, I had a mixed feeling. Being the first finance media company listed here in US, the stock will certainly attract investors who hope to make profits from XFML’s unique position and broad reach (its financial TV program has more than 210 millions viewers). On the other hand, XFML relies heavily on traditional media (TV, radio, and print) to generate advertisement revenue. While the business is well diversified, the growth rate could be moderate. In 2006, XFML had a revenue of $59 million and net income of $3.3 million. Thus, I probably won’t see the stock price skyrocket as that of China Life in the past year.

For the last five Chinese IPO stocks, three of them (CSIQ, GRRF, EDU) traded flat or lower in the first two months after going public. Even high-fly stocks like LFC and BIDU went down shortly after their IPOs. Thus, if you are interested in XFML, you may want to wait a little bit to find the right entry point.

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4 Responses to “Picked up Some XFML”

  1. TFB |  Mar 11, 2007 at 7:16 pm

    “At the midpoint of the forecast range, Xinhua Finance Media would have an initial market capitalization of more than $888 million”

    $888 / $13 * $11 = $739 million market cap
    $739 / $59 = 12x price/revenue
    $739 / $3 = 224x P/E

    That’s rich!

  2. TJP |  Mar 12, 2007 at 4:04 pm

    So are you short or long on XFML shares?

  3. aigaogao |  Mar 24, 2007 at 1:21 am

    Hi,I’m Chinese too:).
    I wrote a post you might like to take a look and I mention your post in my article:
    http://www.aigaogao.com/blog/archives/2007_03_24_1127465.html

  4. dinasourneil |  May 27, 2007 at 12:10 pm

    aigaogao, would you mind translating a summary of what your post says in English if possible? Thanks!