Chinese Internet Stocks: Gainers & Losers In 2014

  • Baidu, NetEase & Vipshop were among the best performing Chinese internet stocks in 2014.
  • NQ, Sina & Qihoo were among the worst performing Chinese internet stocks in 2014.
  • Baidu, NetEase and YY seem poised for a strong performance in 2015.

The record breaking Alibaba IPO in 2014 added yet another high profile name to the list of Chinese stocks listed in the US. China is a big player in the internet economy, and the fact that global internet giants like Facebook (FB) and Twitter (TWTR) are banned here, makes for a unique competitive landscape. Naturally, homegrown Chinese internet companies draw a lot of attention from investors. So, who were the best performers, and the laggards, among Chinese internet stocks in 2014? Here’s a quick roundup with a few Chinese stocks to watch out for.

Best Chinese Stocks 2014

Best performing Chinese internet stocks that delivered the best return in 2014.

Stock Price

Company Name

31-Dec-13

31-Dec-14

LTM Stock Return

Vipshop Holdings (VIPS)

8.4

19.5

134%

Bitauto Holdings Ltd. (BITA)

32.0

70.4

120%

Baidu Inc. (BIDU)

177.9

228.0

28%

NetEase, Inc. (NTES)

78.6

99.1

26%

Shanda Games Limited (GAME)

4.6

5.7

24%

Based on our Baidu stock analysis, we think it’s a fundamentally solid stock. It's one of our top stock picks and has returned about 48% since we added it to that list. In spite of such a strong performance, Baidu valuations have a further upside potential. For those looking to invest in the Chinese online gaming industry, among the local players, NetEase valuations make it one of the Chinese stocks to buy.

Worst Performing Chinese Internet Stocks

Chinese internet stocks that lost the most in 2014.

Stock Price

Company Name

31-Dec-13

31-Dec-14

LTM Stock Return

NQ Mobile Inc. (NQ)

14.7

3.91

-73%

Sina Corporation (SINA)

84.25

37.41

-56%

Youku Tudou Inc. (YOKU)

30.3

17.81

-41%

21Vianet Group, Inc. (VNET)

23.52

15.47

-34%

Qihoo 360 technology (QIHU)

82.05

57.26

-30%

China’s NQ Mobile (NQ) has been at the epicenter of controversies, with a Muddy Waters report alleging that the company is a “massive fraud”. NQ delayed earnings announcements and reported its results for 3 quarters together, in Dec 2014.

Least Expensive Chinese Internet Stocks

Chinese internet stocks with the lowest Price to Sales ratio at the end of 2014.

Company Name

LTM Stock Return

LTM PS

PS Change*

LTM PE

E-Commerce China Dangdang Inc. (DANG)

-3%

0.6

-24%

227

Shanda Games Limited (GAME)

24%

2.4

38%

7.3

Perfect World Co., Ltd. (PWRD)

-11%

1.4

-26%

7.1

Sohu.com Inc. (SOHU)

-27%

1.28

-40%

N/A

Changyou.com Limited (CYOU)

-15%

1.94

-18%

49.94

*Price to Sales ratio change in 2014. We sorted this list based on the Price to Sales multiples, since it’s a more uniform measure that can be applied across companies with varying profitability. Besides, internet companies tend to make losses in their early stages and don’t always have a net income based PE ratio.

Most Expensive Chinese Internet Stocks

Chinese internet stocks with the highest Price to Sales multiples at the end of 2014.

Company Name

LTM Stock Return

LTM PS

PS Change

LTM PE

58.com (WUBA)

8%

15.98

136%

116.39

Autohome Inc. (ATHM)

-1%

14.37

-37%

40.53

Qunar Cayman Islands Ltd. (QUNR)

7%

13.94

76%

N/A

Baidu Inc. (BIDU)

28%

10.84

-19%

38

Bitauto Holdings Ltd. (BITA)

120%

9.82

65%

46.99

Alibaba (BABA) hasn’t completed a year since listing and data such as LTM stock returns isn’t available. However, Alibaba valuations are the steepest of the lot with a Price to Sales multiple of about 18. Expectations around Alibaba earnings growth and the stellar revenue growth the Chinese e-commerce stock has delivered, allow the stock to command such valuations. Baidu (BIDU) valuations, though high, have become more attractive than they were a year ago. This, in spite of the stock performance, indicating the strong revenue growth the search giant has seen. In 2014, three Chinese internet stocks showed a fall in valuation multiples, in spite of a strong stock performance in 2014, indicating improved fundamentals, like growth and earnings.

Company Name

LTM Stock Return

PE Change

PS Change

Vipshop Holdings (VIPS)

134%

-18%

-6%

Baidu Inc. (BIDU)

28%

4%

-19%

YY Inc. (YY)

24%

-52%

-36%

A recent post by Bloomberg on China’s Best Internet Stocks expects Vipshop (VIPS) and Bitauto (BITA) to be strong performers in 2015. We also came across a few other reports which you might find interesting, like this bullish report on Baidu on the NASDAQ site, and this quick read analyzing good Chinese stocks to invest in. Following the Alibaba IPO, it’s but natural that Chinese stocks have come into the limelight. Before you firm up your list of Chinese stocks to buy in 2015, you can look up our 2 minute stock analysis videos to get a quick roundup of key fundamentals like growth, profitability, valuations and other operating metrics. To get you started, here’s our NetEase stock analysis video. If there’s anything we've missed, or something you’d like to add, we’d love to hear from you. Happy investing in 2015!

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Neither Amigobulls, nor any members of its staff hold positions in any of the stocks discussed in this post. The author may not be a certified/registered investment advisor, and the opinions expressed should not be treated as investment advice. Buying and selling of securities carries the risk of monetary losses. Readers/Viewers are advised to carry out their own due diligence and consult their investment advisors before making any investment decisions. Neither Amigobulls, nor the author have any business relationship with any of the companies covered in this post.

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