March 8, 2018
Before the stock market opened this morning, China's version of Craig's List posted earnings and sales results that walloped analysts' fourth-quarter estimates. However, even with these strong numbers behind it, many American investors still aren't familiar with this company. In today's blog, I'd like to introduce you to 58.com Inc. (WUBA), "China's Craig's List."
Headquartered in Beijing, 58.com Inc. manages China's largest online marketplace for local merchants and consumers. Chairman and CEO Yao founded the company in 2005. Providing online classifieds for 381 cities in China, including listings related to housing, used goods, automobiles, pets, yellow pages and more, the website and its companion mobile app have flourished into what's commonly known as "China's Craig's List."
In fact, during the most recent quarter, company management noted that traffic to its mobile app continued to climb higher. The number of paid subscriptions to its service jumped 28% in the fourth quarter.
In addition to this good news from the subscriber front, sales soared 38% year-over-year to RMB2,764.7 million, or $423.10 million, up from $306.63 million in the same quarter a year ago. The company's adjusted earnings per share also surged 5,700% year-over-year to RMB2.78, or $0.56, up from a $0.01 per share loss in the fourth quarter of 2016. The analyst community was expecting earnings of $0.28 per share on $415.08 million in sales, so 58.com posted a 100% earnings surprise and a 1.9% sales surprise.
Looking ahead to the first quarter, 58.com expects revenue between RMB2,290 million and RMB2,390 million, which represents 15.2% to 20.2% annual sales growth in Renminbi. Thanks to the earnings beat and healthy forward-looking guidance, WUBA shares opened slightly higher with the broader indices this morning.
All this together is only part of the reason why 58.com has an A-rating in my Portfolio Grader tool.
In order to maintain this A-rating, 58.com has had to prove it has the institutional buying pressure as well as the quantitative grades in eight key metrics to justify this ranking, which it has done. Add it all up, and it's no small wonder 58.com is a Strong Buy in my Portfolio Grader system.