O.K. it is Tuesday after a long Labor-Day weekend and maybe the HEAT is getting to me...but here I am recommending another Dot.com and a Chinese one at that! Even with all of the news about how the United States is asking China to reconsider their pegging the Yuan to the dollar....but the stock just looks great from here....so let's look at it together.
First of all, I do not own any shares of SOHU. Sohu is, as we write trading at $33.47, up $3.55 or 11.86%.
According to money.cnn.com, SOHU.com "...is an Internet portal in China that offers Chinese language Web navigational and search capabilities, 17 content channels, Web-based communications and community services and a platform for e-commerce services."
On July 22, 2003, SOHU reported financial results for the second quarter ending June 30, 2003. Revenue rose 216% year-on-year to $19.3 million. Sequentially, revenue grew by $4.9 million or 34% from $14.4 million for the first quarter of 2003. Net Income was $.19/share. As far as I can tell, SOHU had no income or a loss last year. You may want to do more research on that question prior to making your own decision.
Morningstar.com shows an exponential growth in revenue from $0.1 million in 1997, $0.5 million in 1998, $1.6 million in 1999, $6.0 million in 2000, $13.0 in 2001, and $29 million in 2002. With the current quarter at $19.3 million this would get us over $70 million in revenue for 2003.
Free cash flow has been improving as well: $(22) million in 2000, $(14) million in 2001, $3 million in 2002 and $7 million in the trailing twelve months.
The balance sheet presented on Morningstar looks excellent with $27.8 million in cash, more than enough to cover the $9.1 million in current liabilities and NO long-term-liabilities are reported. In addition SOHU has another $10.1 million in other current assets.
Looking at Yahoo.com, we find that SOHU has a market cap of $1.07 billion with 35.8 million shares outstanding and of those, only 12.3 million that float. There is no dividend. The p/e is a rich 83.34 and the price/sales is equally high at 22.34. However, this company is growing RAPIDLY and considering the SIZE of the China market, the sky is virtually the limit. With a company just turning profitable the p/e goes quickly from meaningless to a high number then into a reasonable range....hopefully!
There are 2.67 million shares out short representing a mere 0.65 days of trading....so not many shares out there short.
I like the stock except that I am always cautious about foreign companies where I am not sure about the accounting issues....it is hard enough in the US. But the numbers here are compelling and the potential is enormous. Might just be worth a buy in here!
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