NTES CC was very detailed on the unusual charge for tax accrual of 25% as per current unified tax procedure for all companies operating in China both foreign & domestic....
NTES has applied for tax adjustment due to their technology focus....
NTES fully expects that their tax rates will revert to 15% before the year is out.....
NTES will continue to accrue 25% until ruling for 15% comes through.....
NTES will reverse the tax charges in the Q it receives exemption.......
Analyst were in tune with this TAX procedure and will factor 25% tax going forward until exemption is received......
After exemption is received then NTES will Show a HUGE adjustment in that Q ..thus boosting EPS for Q and the entire 08 FY....
NTES does NOT expect any affect on Advertising or other revenue issues due to 3 days of mourning...3 days of mourning for Quake victims is understood by all analyst covering Chinese companies.....a minimal affect will be factored for all companies.....Monday to Wednesday was the 3 days affected by mourning......how busy is NTES on those days with online gaming revenue will be minused out by analyst for Q2....
NTES is very confident about gains in Advertising on a Y/Y basis...Q1 is their slowest Q for Advertising...still gained 37.5% Y/Y by $3 million...$11 million in Q1 08 vs $8 million in Q1 07..
NTES expects to see continuing gains in their business for the rest of FY 08 & into FY09.....
All In all a very confident NTES team.......
It will be interesting to see how Analyst and traders view NTES for Thursday trading.....AH only retail sold in PANIC when they saw basic 32 cents EPS or fully diluted 30 cents EPS...only 42,740 shares traded after earnings came out....
BLOG does NOT give buy or sell.
Saleem
5 comments:
Hi Saleem -
I caught parts of the cc last night...did you get a sense from the analysts questions/comments that they were pleased with the results, and not concerned about the special tax status?
Thx!
Hi Ad,
Preferential tax status of 15% is granted to any Chinese tech company.
NTES certain division qualify for that....
NTES guided 18% t 23% for analyst for FY 2008...which will improve the current EPS by 3 to 6 cents for Q1.....which will be a beat for fully diluted shares.
Also they are buying some company which will be announced ....
Also they have $75 million for share buyback which will end in July 08.....
Analyst were not negative @ all on any aspect of NTES ER.....
Like most of us ..they were NOT ready for 25% tax charge...which was explained clearly to analyst ad listening audience.
In the first 25 minutes only 35,750 shares have traded...if NTES report was viewed as negative we would have traded 1 million last night and 2 least 800,000 in first 25 minutes.....
What is not to like about NTES ER they beat on Top line & with tax adjustment they beat on bottom line.
Close should be very interesting !!!
Saleem
Thanks, Saleem.
SALEEM:
News on SOLAR form IBD on SOLF
Solarfun Rises On Higher Prices
The Chinese solar cell maker earned 32 cents a share, twice as much as expected. Sales shot up 593% to $171.3 mil, way above views. Strong selling prices in Spain and Germany and a rising euro offset higher raw material costs. Solarfun (SOLF) raised its estimate for '08 shipments of photovoltaic modules. Shares rose 5%, up 97% so far in May.
Have a great day and hope out stocks hold up well
M
Hi Saleem,
With the break of 130 on RIMM, it may close the gap soon to 128. Sorry about V... LOL
Beatrice
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