September 11, 2007
Strong Growth Continues for CHINA

By Zacks Equity Research

Zacks senior Chinese market analyst Paul Cheung, CFA is reiterating his Buy recommendation on CDC Corp. (NasdaqGM: CHINA) today. Here\'s why:

\'CDC\'s revenue for the second quarter of 2007 increased 35% year-over-year. However, its adjusted EPS missed market expectations by one cent due to higher selling, general and administrative expenses. We still think CDC is well positioned to leverage the growth opportunities in small-to-medium business enterprise software market and China\'s online game market.

\'In addition, its stock is trading at a lower valuation than its peers. Overall, we don\'t think its current stock price fully reflects the company\'s intrinsic value. Therefore, we are maintaining our Buy rating on CDC shares.

\'Based on our estimate for fiscal year 2007 earnings per share, the stock is trading at 17.5x, which is much lower than the industry mean. Based on our estimate for fiscal year 2008 earnings per ADS, the stock is trading at 13.2x, which is also much lower than the industry mean. Using a P/E multiple of 18.0x our fiscal year 2008 earnings per ADS estimate of $0.57 yields a target price of $10.25, which can reflect company\'s great growth prospects, in our view.\'

Read the full analyst report on CHINA

(Source: Zacks.com)